UNIVERSITY  OF  CALIFORNIA.  SAN  DIEGO 


3  1822  00340  9869 


HF 

/7-'r 

ins 


LECTURES 

History  of  Protection 

IN  THE  UNITED  STATES 

Delivered  before  the  International  Free-Trade  Alliance 

A 
'^ 
W.    G.    S  U  M^S"-^^^' 


PROFESSOR  IN  YAL' 


ALETCOKLIOflti 


NEW   YORK 
PUBLISHED    FOR    THE 

NEW  YORK  FREE  TRADE  CLUB 

By   G.  p.    PUTNAM'S   SONS 

27   4   29  WEST   23D   STREET 
1883 


Press  of 
G.  P.   Putnam's  Sons 

New    York 


PREFACE 


The  following  lectures  were  delivered  by  me  before  the  International 
Free  Trade  Alliance,  in  New  York,  in  the  spring  of  1876.  They  are  here 
republished  exactly  as  delivered,  although  there  are  certain  points  which 
I  should  like  to  elaborate,  if  the  opportunity  were  offered.  I  have 
endeavored  here  to  combine  two  things :  1st,  the  history  of  our  own  tariff 
legislation,  showing  its  weakness,  ignorance,  confusion,  and  oscillation ; 
and,  2d,  a  discussion  of  the  arguments  for  and  against  free  trade,  as  they 
have  presented  themselves  in  the  industrial  and  legislative  history  of  the 
country.  I  have  summed  up  in  the  last  lecture  the  convictions  to  which 
such  a  study  of  the  subject  must  lead.  Suffice  it  here  to  say,  that  when  one 
clears  one's  head  of  all  the  sophistries  and  special  pleas  by  which  protec- 
tion is  usually  defended,  and  looks  at  the  matter  as  a  simple  matter  of 
common  sense,  one  must  be  convinced  that  an  industrious  people  on  a 
fertile  soil,  so  abundant  in  extent  that  population  is  inadequate  to  the 
highest  organization  of  labor,  must  enjoy  advancing  wealth  and  prosper- 
ity. They  will  owe  this  to  a  diligent  use  of  their  natural  advantages. 
They  will  reach  the  maximum  of  production  when  they  produce  and  ex- 
change most  freely.  Certainly  no  application  of  taxation  can  possibly 
increase  their  production  •  that  is  their  national  wealth.  Every  tax  or 
other  interference  with  the  freedom  of  production  or  exchange  produces 
restraint,  confusion,  delay,  change,  risk  and  vexation,  and  these,  as  every 
one  knows,  cause  loss  of  time,  labor,  and  capital,  that  is,  diminish  the  pro- 
duct which  may  be  obtained  from  a  given  amount  of  labor.  The  amount 
of  this  loss  can  never  be  measured  in  figures,  because  we  can  never  get 
statistics  of  "  what  might  have  been  •"  but  when  it  is  shown  here  that  the 
legislation  of  the  United  States  has  been  constantly  vacillating,  not  only  in 
its  policy,  but  also  in  the  degree  to  which  its  policy  has  been  pursued ;  that 
it  has  laid  burdens  on  production  and  exchange  in  a  clumsy,  Lrutal,  and 
ignorant  disregard  of  possible  effects  on  the  delicate  network  of  modern 
industry;  that  it  has  had  in  view,  from  point  to  point,  only  a  single 
interest,  and  has  had  no  national  stand-point  or  conception  of  the  public 
interest  (much  as  it  boasts  to  the  contrary) ;  then,  I  think,  any  one  must 
see  that  such  legislation  has  lamed  the  national  productive  power,  wasted 
the  natural  advantages  which  the  nation  enjoys,  diminished  its  wealth, 
and  contracted  the  general  status  of  comfort  for  the  whole  people. 


4  LECTURES  ON  PROTECTION. 

Adam  Smith  laid  down  four  rules  by  which  all  taxes  ought  to  be 
tested.  Experience  has  ratified  them  so  thoroughly  that  they  are  no 
longer  questioned  by  anybody.    They  ought  to  be  known  by  everybody. 

1.  Taxes  should  be,  as  far  as  practicable,  equal. 

2.  They  should  be  definite  in  amount  (not  uncertain  or  variable). 

3.  They  should  be  collected,  so  far  as  possible,  at  the  time  most  con- 
venient to  the  payer,  so  as  not  to  cripple  the  process  of  production. 

4.  They  should  be  so  arranged  as  to  give  the  maximum  revenue  to 
the  government  at  the  minimum  cost  to  the  people,  i.  e.,  they  should  cost 
as  little  as  possible  to  collect ;  and  they  should  keep  capital  out  of  the 
hands  of  the  people  as  short  time  as  possible. 

Protective  taxes  are  hostile  to  revenue,  because  the  purpose  of  a  pro- 
tective tax  is  to  prevent  importations.  The  moment,  however,  that  a  tax 
begins  to  have  this  effect  it  prevents  revenue.  Hence,  where  protection 
hegms,  there  revenue  ends. 

There  is  no  conceivable  ground  of  right  by  which  the  legislature 
may  decide  what  things  ought  to  be  produced,  and  in  what  measure,  and 
then  use  its  taxing  power  to  carry  out  its  notions.  Every  tax  is  an  evil, 
and  it  is  on  the  defensive.  Its  need  must  be  shown,  and  no  tax  can  le 
defended  which  is  laid  for  anything  but  revenue  to  defray  the  legitimate 
and  necessary  cost  of  public  peace,  order,  and  security. 

For  taxes  laid  to  this  end,  some  further  rules  can  now  be  laid  down 
as  established  by  long  experience. 

1.  No  such  taxes  should  be  allowed  to  act  protectively  to  any  degree. 
They  should  be  offset  by  excise  taxes  of  equivalent  amount. 

2.  They  should  be  laid  on  as  few  articles  as  possible,  and  in  the  sim- 
plest way  possible  (to  avoid  expense  in  collection). 

3.  The  legislator  should  try  to  find  the  maximum  revenue  point  on 
each  article  {i.  e.,  If  there  were  no  tax  there  would  be  no  revenue.  If 
there  were  a  prohibitory  tax  there  would  be  no  revenue.  There  is  a  point 
between,  at  which  the  highest  revenue  can  be  obtained  with  the  least  cost 
and  the  least  fraud). 

4.  Raw  materials  should  not  be  taxed.  (It  is  not  easy  to  define  "raw 
materials,"  but  the  rule  has  value  as  a  practical  rule.  Taxes  on  raw  ma- 
terials strangle  industry  at  its  birth.) 

These  rules  are  only  practical  rules,  derived  from  experience.  There 
are  no  scientific  laws  of  taxation,  because  there  are  no  natural  laws  of 
taxation.  Nature  has  not  provided  for  taxation,  as  she  has  for  produc- 
tion, exchange,  distribution,  and  consumption.  Taxation  is  part  of  the 
co-operation  of  society  for  its  own  defense  against  the  evil  and  destructive 
forces  within  itself.  Any  state  which  lays  protective  taxes  misuses  the 
means  of  defense  to  increase  the  evils. 

W.  G.  S. 


CONTENTS. 
Lecture  I. 

The  i'^ATiONAL  Idea  and  the  Ajuebican  Ststem,        -  .  .-  •••? 

Lecture  II. 

Bboad  Principles  TJNDBiUiTiNG  the  Tariff  Conteovbrsy,  .  -  •  -  •       11 

Lecture  III. 
The  Okioin  op  Protection  in  this  Country,  .  .  .  ....17 

Lecture  IV. 
The  Establishment  of  Protection  in  this  Country,         ......       84 

Lecture  V. 

Vacillation  of  the  Protective  Polict  in  this  Country — Conclttsio:?,  -  •  •       49 


LECTURE   I. 


The  Natioital  Idea  and  the  American"  System. 

It  is  a  sign  of  a  dogma  in  dissolution  to  change  its  form  and  to  yielil 
points  of  detail,  while  striving  to  guard  its  vested  interests  and  tradi- 
tional advantages.  Just  now  the  dogma  of  protection  is  striving  to  find 
standing  ground,  after  a  partial  retreat,  for  a  new  defense,  in  the  doctrine 
of  nationality.  TVe  are  told  that  there  is  only  a  "  national "  and  not  a 
*' political"  economy,  that  there  are  no  universal  laws  of  exchange,  con- 
sequently no  science  of  political  economy;  that  it  is  only  an  art,  and  has 
only  an  empirical  foundation,  and  that  it  varies  with  national  circum- 
stances to  such  a  degree  as  to  be  controlled  by  nothing  higher  than 
traditional  policy  or  dogmatic  assumption.  Great  comfort  is  found  for 
this  position  in  the  assertion  that  the  German  economists  have  discovered 
or  adopted  its  truth.  How  utterly  unjust  and  untrue  this  is  as  a  matter 
of  fact,  those  who  have  read  the  works  of  the  German  economists  must 
know.  It  is  untrue,  in  the  first  place,  that  they  are  unanimously  of  the 
school  of  the  socialistes  en  chaire,  and,  in  the  second  place,  it  is  untrue 
that  the  socialistes  e7i  chaire  are  clear  and  unanimous  in  their  position. 
They  occupy  every  variety  of  position,  from  extreme  willingness  to  entrust 
the  state  with  judgment  in  the  application  of  economical  prescriptions, 
to  the  greatest  conservatism  in  that  regard.  Finally,  it  is  not  true  that 
any  of  them  are  protectionists. 

"We  do  not  intend,  however,  to  discuss  the  opinion  or  authority  of 
the  schools  in  question.  If  it  should  be  claimed  that  the  extreme 
admission  made  by  some  of  the  Germans  of  this  school,  that  protection 
may  be  beneficial  to  a  nation  at  a  certain  stage  of  development,  is 
applicable  to  the  United  States  to-day,  we  should  desire  no  better  footing 
for  the  controversy. 

It  is  more  directly  interesting,  however,  to  examine  the  doctrine  of 
nationality  on  its  merits.  It  will  appear  upon  even  a  cursory  examination 
of  this  kind,  that  existing  nations  are  arbitrary  and  traditional  divisions. 
There  was  published  in  Europe,  in  1863,  when  the  Emperor  Napoleon 
was  urging  on  an  attempt  to  secure  stable  equilibrium  in  European 
politics  by  adjusting  political  divisions  according  to  race  and  language 
divisions,  a  map  of  Europe  thus  rationally  constructed.  The  effort, 
however,  offered  the  most  striking  proof  of  the  impossibility  of  recon- 
structing, on  any  such  rationalistic  or  logical  basis,  political  circumstances 


8  PROTECTION  IN  THE  UNITED  STATES. 

Which  are  the  historical  outgrowth  of  political  struggles  and  political 
accidents.  The  nations  which  must  be  made  the  subject  of  discussion 
are,  therefore,  such  as  exist,  and  of  them  it  is  true  that  their  boundaries 
coincide  witli  no  lines  of  race,  language,  culture,  industry,  commerce,  or 
anything  else  which  would  give  tlie  basis  of  scientific  classification,  so  that 
different  principles  could  be  consistently  applied  in  each.  There  was  a 
time,  indeed,  when  the  civil  subdivisions  were  small  and  numerous — when 
manners,  customs,  costumes  and  language  varied  over  every  hundred 
square  miles  of  Europe — but  the  whole  tendency  of  the  great  inventions 
of  modern  times  is  to  obliterate  these  boundary  lines  for  purposes  of 
industry  and  trade. 

It  is  not  necessary  to  go  into  the  history  of  Europe  for  proofs  and 
illustrations.  The  very  best  are  furnished  by  our  own  continent  and  our 
own  nation.  The  geograpliical  area  known  to-day  as  the  United  States 
is  the  result  of  discovery,  conquest  and  purchase.  It  would  have  been 
impossible  a  century  ago  to  constitute  an  empire  of  such  extent,  and  to 
govern  it  according  to  the  requirements  of  modern  life.  The  improve- 
ments in  transportation  and  the  transmission  of  intelligence  have  made 
it  physically  possible,  and  the  combination  of  local  institutions  with  a 
centralized  organization  has  made  it  politically  possible. 

When  we  turn  to  inquire,  however,  why  it  has  been  limited  just  as 
it  has,  why  Canada  and  Mexico  are  outside,  and  why  Texas,  California 
and  Alaska  are  within,  we  come  at  once  to  the  historical  antecedents 
which  are  partly  accidents  and  partly  ancient  struggles  and  hostilities. 
Canada  was  never  made  thoroughly  English  before  the  revolutionary 
war;  while  it  was  French  it  was  always  hostile  to  the  English  colonies. 
This  hostility  was  traditional,  and  there  was  no  sympathy  with  the 
revolution.  New  Brunswick  and  Nova  Scotia  were  largely  peopled  by 
the  Tory  refugees,  whom  the  unwise  severity  of  the  Whigs  forced  to 
emigrate  during  and  after  the  war.  Texas  was  won  from  Mexico  in  war. 
California  and  the  other  Pacific  States  were  obtained  partly  by  conquest 
and  partly  by  purchase.  A  few  years  ago  we  discussed  a  plan  for  pur- 
chasing San  Domingo.  Out  of  these  historical  movements,  part  of  which 
fell  out  one  way  and  part  the  other,  the  actual  geographical  limits  of  the 
United  States  result. 

Now,  according  to  the  Constitution  of  the  United  States,  no  one  of 
these  States  can  make  any  laws  restricting  commerce  between  itself  and 
any  of  the  others.  If  it  be  asserted  that  states  which  pursue  different 
industries  cannot  afford  to  trade  fi-eely  with  one  another,  here  we  have 
them — New  York  and  Pennsylvania,  Massachusetts  and  Minnesota,  Maine 
and  Louisana.  If  it  be  asserted  that  states  with  like  industries  cannot 
afford  to  trade  freely  with  one  another,  here  we  have  tliem — Indiana  and 
Illinois,  Iowa  and  Minnesota,  Massachusetts  and  Rhode  Island,  Alabama 


PROTECTION  m  THE  UlflTED  STATES.  9 

and  Mississippi.  If  it  be  said  that  small  States  cannot  afford  to  trade 
freely  with  great  empires,  here  are  New  York  and  Connecticut,  Pennsyl- 
vania and  Delaware.  Why  do  not  the  great  states  suck  the  life  out  of  the 
small  ones?  If  it  be  said  that  new  states  with  little  capital,  and  on  the 
first  stage  of  culture,  cannot  afford  to  exchange  freely  with  old  states 
'having  large  capital  and  advanced  social  organization,  here  are  New 
'York  and  Oregon,  Massachusetts  and  Idaho.  How  can  any  territories 
ever  grow  into  states  under  the  pressure  ?  If  it  be  said  that  a  state  which 
relies  on  one  industry  cannot  afford  to  exchange  freely  with  one  which 
has  a  diversified  industry,  here  are  Pennsylvania  and  Colorado,  California 
and  Nevada,  any  of  the  cotton  states  and  any  of  the  north-eastern  states. 
No  such  strong  illustrations  are  furnished  by  any  states  in  the  world 
which  are  sovereign  and  independent  of  each  other.  The  Constitution 
of  the  Union  enforces  absolute  freedom  of  exchanges,  and  each  state  pays 
its  own  taxes  and  supports  its  own  government.  The  traveler  rarely 
knows  when  he  passes  from  one  state  to  another.  As  to  what  he  buys  or 
where  he  buys,  what  he  sells  or  where  he  sells,  it  Avould  be  considered  an 
unwarrantable  impertinence  for  any  public  official  to  inquire.  Yet  no 
man  has  ever  been  known,  so  far  as  we  are  aware,  to  complain  of  tliis  as 
a  hardship,  or  as  imposing  a  loss  upon  him,  and  no  such  complaint  has 
arisen  from  any  state  as  a  state,  nor  has  any  one  been  heard  to  claim  that 
there  was  here  an  actual  loss,  which  must  be  endured  for  the  sake  of  the 
great  benefits  which  come  from  Union.  On  the  contrary,  it  is  universally 
and  tacitly  agreed  that  this  is  one  of  the  great  benefits  of  the  Union. 

Here,  however,  comes  in  another  phase  of  the  matter.  If  a  man 
lives  in  Vermont  he  must  trade  freely  with  New  Hampshire,  Massa- 
chusetts and  New  York,  but  if  he  wants  to  trade  northward  to  Canada, 
it  is  regarded  as  fatal  to  him  and  to  his  country,  that  he  should  do  so 
freely.  As  we  won  Texas  from  Mexico,  we  enter  into  absolute  free  trade 
with  her,  but  we  think  that  it  would  be  ruinous  to  trade  freely  with  the 
rest  of  the  ancient  state  of  Mexico.  If  we  had  got  the  political  jurisdic- 
tion of  San  Domingo,  we  should  have  entered  into  free  exchanges  with 
her,  but  the  difficulty  of  the  political  jurisdiction  was  the  main  ground 
of  the  wise  decision  of  the  nation  not  to  buy  that  island.  If,  however, 
we  cannot  have  the  trouble  of  the  political  jurisdiction,  we  think  it  would 
be  calamitous  to  have  the  free  exchanges.  Free  exchanges  with  Cuba 
are  not  to  be  thought  of  on  our  part,  even  if  they  would  be  granted  on 
hers. 

Here,  then,  the  refutation  of  the  "  nationality  "  notion  is  right  before 
us,  and  it  is  at  the  same  time  the  condemnation  of  our  policy  in  regard 
to  foreign  commerce.  If  there  be  any  such  thing  as  an  "American 
system" — a  system  which  we  can  claim  to  illustrate  and  advocate  before 
the  civilized  world,  it  must  be  that  of  absolute  free  trade,  each  state  or 


10  PROTECTION  IN  THE  UNITED  STATES. 

nation  providing  for  its  own  needs  and  expenses,  each  state  freely  open 
to  all  comers,  securing  peace  and  safety  to  persons  and  projierty  while 
within  its  borders. 

The  "British  system"  is  different,  and  is  distinctly  defined.  It  is 
to  raise  revenue  by  customs  for  convenience,  and  to  lay  excises  to  coun- 
teract "  incidental  protection."  "We  would  be  very  glad  to  see  the  British 
system  introduced  into  this  country,  but  if  the  protectionists  taunt  free- 
traders with  flinching  from  the  consequences  of  their  doctrine,  we  accept 
the  challenge.  AYe  are  convinced  by  the  experience  of  the  United  States, 
that  the  best  system  would  be  to  have  absolutely  free  exchanges,  and 
to  leave  each  nation  to  pay  the  expense  of  maintaining  the  organization 
of  society  within  its  own  borders. 

Another  application  of  the  facts  here  discussed  which  is  put  to  us,  is 
deserving  of  far  less  respectful  treatment.  It  is  said  that  we  have  free 
trade  already  within  the  Union,  and  that  we  are  discontented  and  un- 
reasonable, because  we  demand  more.  It  would  be  difficult  to  show  why 
a  man  who  has  ten  thousand  dollars  should  not  sue  for  ten  thousand 
more  which  are  due  him,  or  why  a  man  who  enjoys  the  right  of  locomo- 
tion is  unreasonable  in  demanding  the  right  of  association. 

There  is  in  all  that  we  have  said  no  infringement  upon  the  true  idea 
of  the  "  nation,"  and  no  derogation  from  its  value  and  dignity.  It 
exists  historically  and  traditionally,  and  we  take  it  as  it  is  handed  down 
to  us.  It  is  an  organized  human  society,  whose  limits  are  given  histori- 
cally, and  are  maintained  for  convenience,  because  they  allow  play  to 
certain  local  interests,  jjrejudices,  traditions,  habits  and  customs.  Whether 
it  is  formed  by  accident  and  immemorial  tradition,  or  by  colonization 
and  legislative  act,  it  develops  an  organic  life.  The  society  as  such 
develops  functions.  Its  harmonious  action  emanates  from  its  individual 
members  and  reacts  upon  them.  Its  government  is  the  machinery  by 
which  harmony,  co-operation  and  unity  are  brought  about.  It  would 
seem,  however,  that  America  had  done  its  greatest  service  to  the  world 
by  showing  that  states  did  not  exist  for  the  sake  of  bringing  men  into 
convenient  groups  for  making  either  commercial  or  military  war  upon 
each  other,  but  that  they  might  more  easily  embrace  the  earth  in  a  family 
of  harmonious  communities. 


LECTURE  II. 


Broad  Phinciples  Underlying  the  Tariff  Controversy. 

The  world  has  heard  a  great  deal  about  liberty  for  the  last  century. 
That  period  has  been  marked  by  great  struggles  on  the  part  of  nations 
to  secure  independence,  and  on  the  part  of  classes  and  individuals  to 
secure  freedom  from  old  traditional  restraints.  The  world  has  struggled 
towards  "freedom"  and  "liberty"  as  if  these  were  the  first  considera- 
tions of  peace,  justice,  prosperity  and  happiness,  aud  the  result  has  been 
to  produce,  in  the  forefront  of  modern  civilization,  states  whose  funda- 
mental principle  is  to  give  the  freest  scope  to  individual  energy  and  effort. 

We  in  the  United  States  nipke  it  our  greatest  boast  that  Ave  have 
accepted  this  broad  principle  absolutely,  and  applied  it  fearlessly ;  never- 
theless, we,  who  are  met  here  to-night,  are  associated  to  demand  more 
liberty.  There  is  no  body  ox  our  fellow-citizeus  worth  mentioning 
who  deny  the  right  and  the  expediency  of  private  property.  What  we 
have  to  demand,  and  what  the  majority  of  our  fellow-citizens — so  far  as 
their  will  has  yet  been  vjonstitutionally  expressed — deny  us,  is  the 
privilege  of  using  our  property  as  we  like,  that  is,  of  exchanging  it  when 
and  where  and  with  whomsoever  we  will.  When  we  demand  this  privi- 
lege, which  belongs  to  us  on  the  simplest  principles  of  right  reason  and 
common  sense,  we  are  met  by  a  speculative  theory  based  on  artificial 
assumptions,  put  forward  sometimes  on  bare  considerations  of  selfish 
interest,  and  sometimes  with  no  little  parade  of  abstract  philosophizing. 
We  are  told,  "  Oh,  no!  It  is  not  best  for  the  state  that  you  should  do  as 
you  like  about  making  your  exchanges.  Tho  legislature  must  consider 
the  question,  and  prescribe  for  you  Avith  whom  and  for  Avhat  you  shall 
exchange.  If  you  deal  with  the  designated  persons,  your  countrymen, 
they  will  gain,  the  Avealth  of  the  community  will  increase,  and  you,  as  a 
member  of  the  community,  Avill  participate,  and  be  better  off  in  the  end 
than  if  you  had  been  let  alone." 

Now,  Ave  dispute  this  theory  at  every  stage.  We  deny  that  the 
state,  i.  e.,  the  legislature,  can  make  any  such  provision  for  us  better  than 
we  can  make  for  ourselves,  and  Ave  appeal  to  experience  of  everything  it 
tries  to  do;  Ave  deny  that  it  has  any  business  to  theorize  for  us  in  the 
premises ;  we  deny  that  the  designated  persons  Avill  gain — at  least,  that 
they  Avill  gain  as  much  as  they  Avould  if  they  were  left  to  deal  with  us  on 
their  own  footing ;  we  deny  that  they  can  gain  anything  from  us,  on 


j^2  PROTECTION  IN  THE  UNITED  STATES. 

accoimt  of  the  law,  but  wliat  we  lose;  we  deny  that  the  total  gains  to  one 
part  of  society  by  this  process  can  ever  exceed  the  total  losses  of  another 
part,  i.  e.,  that  the  process  can  increase  the  Avealth  of  the  community; 
we  deny,  finally,  that  our  share  of  these  hypothetical  gains  can  ever  be 
redistributed  to  us  so  as  to  brmg  back  our  first  loss.  We  have  never  seen 
money  go  through  such  a  process,  passing  througli  many  hands,  and 
come  back  whole,  to  say  nothing  of  loss  and  waste. 

Thus  the  issue  is  joined.  On  the  one  side  are  broad  and  simple 
principles,  so  elementary  that  they  are  mere  truisms,  and  on  the  other 
side  are  special  pleas  of  various  kinds  set  up  to  befog  men's  judgment, 
and  prevent  them  from  drawing  the  inferences  which  follow  inevitably. 

Let  me  suggest  to  you  two  or  three  ot  tiie  "broadest  and  most  com- 
manding principles  which  really  decide  this  question : 

1.  We,  Americans,  have  made  it  tlie  first  principle  of  our  society 
that  no  man  shall  obtain  by  law  any  advantage  in  the  race  of  life  on 
account  of  birth  or  rank,  or  any  traditional  or  fictitious  privilege  of  any 
kind  whatsoever,  and  on  the  other  hand,  we  have  removed,  so  far  as  the 
Jaw  can  remove,  all  the  hindrances  and  stumbling  blocks  which  come 
from  circumstances  of  birth  and  family.  Society  gives  no  aid,  but  it 
removes  all  obstacles  of  social  prejudice  and  tradition.  There  is  not  a 
man  in  the  country  who  does  not  resi)ond  with  a  full  heart  to  the  Avisdom 
and  truth  of  this  relation  of  society  to  the  individual.  Now,  on  what 
principle  is  this  relation  based?  It  is  on  the  belief  that  society  makes 
the  most  of  its  members  in  that  way.  Some  men  have  more  in  them 
than  others.  We  do  not  know  which  is  which  until  they  show  it;  but 
we  believe  that  the  way  to  let  each  one  come  to  nis  best,  is  for  society  to 
set  them  all  on  their  feet,  and  then  let  them  run  each  for  himself.  We 
believe  that  the  best  powers  of  the  community  are  brought  out  in  that 
way. 

It  does  not  follow  that  men  so  treated  never  make  mistakes,  and 
never  ruin  themselves.  We  see  them  do  tliis  every  day;  but  if  it  Avere 
proposed  that  the  state  should  interfere,  fcAv  Avould  be  led  astray  by  the 
proposition. 

The  same  principle  applies  to  trade  directly  and  completely.  The 
productive  poAVcrs  of  men  and  communities  difler,  but  Avhatever  they  are, 
more  or  less,  they  reach  their  maximum  under  liberty.  The  total  of 
national  Avealth  is  greatest  Avhere  each  disposes  of  his  own  energy  in  pro- 
duction and  exchange  Avith  the  least  interference.  This  is  not  saying 
that  none  Avill  make  mistakes,  or  that  free  trade  will  eliminate  all  ills 
from  human  life.  Free  trade  Avill  not  make  the  idle  enjoy  the  fruits  of 
industry,  nor  the  thriftless  possess  the  reAvards  of  economy.  Poverty, 
pain,  disease,  misery  will  remain  as  long  as  idleness  and  vice  remain. 
Free  trade  Avill  only  act  in  its  own  measure  and  Avay,  to  leave  men  face  to 


PROTECTION  m  THE  UNITED  STATES.  13 

face  with  these  things,  with  a  somewhat  better  chance  to  conquer  them. 
It  is  one  of  the  great  vices  of  protection  that  it  makes  the  industrious 
suffer  for  the  idle,  and  the  energetic  and  enterprising  bear  the  losses  of 
the  stupid. 

2.  If,*now,  you  examine  the  opposite  theory  you  will  find  that  it  assumes' 
that  Ave  or  our  ancestors  all  made  a  great  mistake  in  coming  to  this 
country  and  trying  to  live  here.  We  are  told  that  a  tariff  is  necessary  to 
^  make  a  market"  for  our  farmers,  that  a  tariff  is  necessary  to  keep  our 
manufactures  from  dsstruction,  that  navigation  laws  arc  necessary  to 
preserve  our  shipping.  Some  of  the  old  countries  support  a  population 
twenty  or  thirty  times  as  dense  as  ours  with  little  or  nothing  of  this 
artiQcial  system.  If,  then,  we  are  not  able  to  live  here  Avithout  this  aid, 
we  must  have  left  a  part  of  the  world  where  life  is  easier  for  one  where  it 
is  harder.     This  brings  me,  then, 

3.  To  the  great  fundamental  error  of  the  theory,  viz. :  That  taxation 
is  a  productive  force.  No  emigrants  go  to  the  desert  of  Sahara.  None 
would  go  to  New  York  if  it  were  sand  and  rocks.  If,  however,  New 
York  is  a  part  of  the  earth's  surface,  consisting  of  arable  land  fit  to  pro- 
duce food  for  man  ;  if  it  is  intersected  by  mountains,  covered  by  forests, 
and  containing  iron  and  coal,  and  if  it  possesses  great  rivers  and  a 
splendid  harbor,  then  the  conditions  of  supporting  human  life  are  ful- 
filled. It  requires  only  labor  and  capital  to  build  up  there  a  great  and 
prosperous  community.  It  is  plain  that  some  parts  of  the  earth's  surface 
contain  more  materials  for  man's  use  than  others,  and  the  fact  as  to  New 
York  will  affect  the  wealth  of  its  inhabitants.  It  is  plain  that  it  makes 
a  diffei'f^nce  Avhether  the  people  are  idle  or  industrious,  listless  or  ener- 
getic, sluggish  or  enterprising.  It  is  plain  that  it  makes  a  difference  how 
much  capital  they  have,  or  whether  there  are  enough  of  them  for  the 
best  distribution  of  labor.  It  is  plain  that  it  makes  a  difierence  what  is 
the  state  of  the  arts  and  sciences,  and  what  are  the  facilities  of  transpor- 
tation. 

The  wealth  of  New  York  at  any  given  time  must  depend  on  the  way 
in  which  these  factors  are  combined.  Now  the  question  arises:  How  can 
taxation  possibly  increase  the  product  ^  Which  one  of  the  factors  does 
it  act  upon  ? 

Just  consider  what  taxation  is.  We  pay  taxes,  in  the  first  place,  to 
pay  for  the  necessary  organization  of  society,  in  order  that  we  may  act 
together,  and  not  at  cross  purposes  like  a  mob ;  but  if  that  were  all  the 
state  had  to  do  taxes  would  be  very  small.  We  must  support  courts  and 
police,  and  army  and  navy.  These  we  need  for  peace,  and  justice,  and 
security.  But  suppose  that  there  were  none  who  had  the  will  to  rob,  or  to 
swindle,  or  to  cheat,  or  to  do  violence,  the  expenditures  under  this  head 
would  dwindle  to  nothing.    It  follows  that  taxes  are  the  tribute  we  pay 


14  PROTECTION  IN  THE   UNITED  iSTATES. 

to  avarice,  and  violence,  and  rapine,  and  all  the  other  vices  which  dis- 
figure human  nature.  Taxes  are  only  those  evils  translated  into  money 
and  spread  over  the  community.  They  are  so  much  taken  Irom  tijo 
strength  of  the  laborer,  or  tne  fertility  of  the  soil,  or  the  benefit  cf  the 
slimate.     They  are  loss  and  waste  to  almost  their  entire  extent. 

This  is  the  function  of  government  then,  which  it  is  proposed  to 
use  to  create  value,  to  do  what  men  can  do  only  by  applying  labor  and 
capital  to  laud.     Let  us  take  a  case  to  test  it.     Let  us  suppose  that  no 
woolen  cloth  is  made  in  New  York,  but  that  a  New  York  farmer,  at  the 
end  of  a  certain  time,  has  ten  bushels  of  wheat,  of  which  one  bushel  will 
buy  a  yard  of  imported  cloth.     After  the  exchange  then   he  has  nine 
bushels  of  wheat  and  one  yard  of  cloth.     If  any  one  could  make  cloth  in 
New  York  as  easily  as  he  could  raise  a  bushel  of  wheat,  some  one  would 
do  it  as  soon  as  there  was  unemployed  labor  and  capital,  and  that  would 
be  the  end  of  the  matter;  but  if  no  one  undertakes  the  business  it  must 
be  because  labor  and  capital  are  all  employed,  or  because  it  takes  more 
labor  and  capital  to  produce  a  yard  of  cloth  than  a  bushel  of  wheat.     Let 
us  suppose  that  it  would  take  as  much  as  a  bushel  and  a  half  of  Avheat. 
Now,  a  protectionist  proposes  to  the  state  to  tax  imported  cloth  one-half 
bushel  of  wheat  per  yard.      If  his  plan  is  carried  out  the  difficulty  of 
obtaining  imported  cloth  is  raised  to  one  bushel  and  a  half  of  wheat  per 
yard,  which  is  the  rate  of  difficulty  at  which  it  can  be  produced  in  New 
York.     The  protectionist  then  begins  and  offers  his  cloth  at  a  bushel 
and  a  half  per  yard.     The  farmer  who,  as  before,   has   produced   ten 
bushels,  now  buys  at  the  new  rate,  and  after  the  exchange  stands  [)os- 
sessed  of  eight  and  a  half  bushels  of  wheat  and  one  yard  of  cloth. 
Whither  has  the  other  half  bushel  gone  ?     It  has  gone  to  make  up  a  fund 
to  hire  some  men  to  make  life  in  New  York  harder  than  God  and  nature 
made  it.    From  time  to  time  we  are  told  how  much  "  our  industries, have 
increased."     So  far  as  their  increase  is  in  fact  due  to  this  arrangement,  it 
is  only  a  proof  how  much  mischief  has  been  done.     This  application  of 
taxation   does   not   alter   the   nature   of    taxation,    it   only   extends   its 
effects  arbitrarily  and  needlessly,  and  inflicts  upon  the  people  a  greater 
measure  than  they  need  otherwise  bear  of  the  burden  which  is  due  to 
robbery,  injustice,  war,  famine  and  the  other  social  ills. 

4.  Protection  is,  moreover,  hostile  to  improvements.  AVe  are  always 
eager  to  devise  improved  methods  and  to  invent  machinery  to  "save 
labor,"  but  cverj  such  improvement  which  we  introduce  involves  the 
waste  and  destruction  of  a  great  deal  of  capital.  Old  machinery  must  be 
discarded,  although  it  is  not  worn  out.  This  loss  is  not  incurred  by  any- 
body willingly  ;  it  is  enforced  by  competition.  When,  therefore,  competi- 
tion IS  withdrawn  or  limited  the  iiieentivo  to  improvement  is  lessened  or 
destroyed.     This  applies  especially  in  mauufaclures  where  the  interna- 


PROTECTION  IN  THE   UNITED  STATES.  15 

tional  competition  is  cut  off  by  protective  duties.  The  Scame  principle 
that  protection  resists  improvement  applies  even  more  distinctly  to  those 
improvements  which  are  made  in  transportation.  In  spite  of  their  theories 
men  rejoice  in  all  the  improved  means  of  communication  which  brini; 
nations  nearer  together.  A  new  railroad  or  an  improved  steamsliip  i 
regarded  as  a  step  gained  in  civilization.  Such  improvements  are  realized 
in  diminished  freights  and  diminished  prices  of  imported  goods.  No 
sooner  is  this  realized,  however,  than  "foreign  competition"  is  found  to 
be  worse  than  ever.  An  outcry  goes  up  for  "  more  protection,"  and  a  new 
tax  IS  put  on  to-day  to  counteract  what  wc  rejoiced  over  yesterday  as  :in 
immense  gain.  We  spend  millions  to  dredge  out  onr  harbors,  to  remove 
rocks  and  cut  channels  through  sandbars,  as  if  it  Avere  a  gain  to  liave 
communication  inward  and  outward  as  free  as  possible,  and  as  soon  as  we 
experience  the  effects  in  reduced  cost  of  goods  we  lay  a  new  tax,  like  re- 
storing the  sandbars,  in  order  to  undo  our  work.  Indeed,  to  build  sand- 
bars across  our  harbors  would  be  a  far  cheaper  means  of  reaching  the 
same  end.  Next,  we  find  that  the  numerous  and  complicated  taxes  have 
made  it  impossible  for  us  to  build  ships  to  sail  across  the  ocean  where 
they  must  come  in  competition  with  foreign  ships;  so  we  make  navigation 
acts  and  forbid  the  purchase  of  ships,  exclude  foreigners  from  our  coasting^ 
trade,  and  finally,  propose  bounties  and  subsidies,  all  of  which  must  come 
at  last  out  of  the  products  of  our  labor,  in  order  to  try  to  get  ships  once 
more.  It  is  like  the  man  who  cut  a  piece  from  his  coat  to  mend  his 
trowsers,  a  piece  from  his  vest  to  replace  the  hole  in  his  coat,  a  piece  from 
his  trowsers  to  restore  his  vest,  and  so  on  over  again.  Did  he  ever  get  a 
whole  suit?     He  found  in  a  little  Avhile  that  he  had  only  a  rag  left. 

We  are  told,  however,  that  if  we  do  not  do  all  this  we  shall  be  "inun- 
dated" with  foreign  goods.  The  word  is  appalling,  and  carries  with  it  a 
fallacy  which  often  seems  to  have  great  poAver.  On  what  terms  shall  we 
get  this  flood  of  good  things  ?  Will  they  be  given  to  us  ?  If  so,  Avhat  can 
we  do  better  than  to  stop  work  and  live  on  this  generosity?  Why  are  we, 
however,  selected  as  the  especial  objects  of  this  bounty,  if  bounty  it  is? 
Why  do  not  England  and  France  and  Belgium  and  Germany  pour  out 
their  inundations  on  Patagonia  and  Iceland  ?  The  answer  is  plain  enough. 
The  goods  are  not  gifts,  they  arc  offered  for  exchange.  Nothing  can  force 
us  to  buy  or  dictate  terms  of  exchange  ;  and  the  inundation  comes  to  us 
because  we  are  known  to  be  rich  and  able,  and  because  we  inhabit  a  conti4 
nent  prolific  in  some  of  the  chief  objects  of  human  desire.  It  is  not  the 
beggar  who,  Avhen  he  goes  down  the  street,  is  "inundated"  with  wares 
from  the  various  stores.  If  it  were  he  Avould  probably  stem  the  tide  with 
joy.  It  is  the  rich  man  only  to  whom  good  things  are  freely  offered  Avith 
a  well  understood  condition;  few. rich  men  have  ever  been  heard  to  com- 
plain of  it.     If,  then,  the  Americans  have  these  good  things  offered  them. 


IQ  PROTECTION   IN  THE   UNITED  iSTATES 

in  exchange  and  they  allow  themselveti  to  be  worsted  in  the  bargain,  they 
sadly  belie  their  reputation. 

These  few  observations  which  I  have  now  presented  as  bearing  on  tliis 
k'^ubject  are  very  broad  and  comprehensive,  and  very  sweeping  m  their 
reffc'ct.  Tiiey  appeal  directly  to  common  sense  and  right  reason.  They 
give  us  the  correct  point  of  view,  and  dispel  some  of  the  fog  which  has 
collected  from  habit  and  prejudice  around  this  subject.  They  lead  us 
right  up  to  the  doctrine  which  the  United  States  have  put  m  practice  in 
their  own  internal  trade — absolute  freedom  of  exchange  and  local  or 
internal  taxation.  We  have  proved  the  practical  value  of  that  system 
here  over  a  continent.  I  cannot  see  why  the  same  system  would  not  be 
a  great  gain  if  extended  over  Canada,  Mexico  and  the  West  Indies.  I 
cannot  see  why  it  would  not  be  a  great  gain  if  all  South  America  Avere 
embraced  in  a  confederation  exactly  like  ours  as  far  as  this  point  is  con- 
cerned, with  absolute  free  trade  between  the  states.  I  cannot  see  why  all 
Europe  would  not  gain  by  similar  relations,  as  far  as  trade  is  concerned; 
and  I  see  no  reason  why  it  should  not  be  equally  beneficent  if  extended 
to  the  whole  civilized  globe. 

The  objections  come  in  the  shape  of  stubborn  prejudices  and  old 
errors  attaching  to  narrow  and  special  considerations.  Some  people  dread 
the  sweep  of  a  great  general  principle,  however  clear  and  certain  and 
scientific  it  may  be.  They  dispose  of  it  as  a  *'  theory."  "Well,  I  am  a  theorist. 
I  accept  the  disabilities  and  demand  the  advantages  of  my  position;  and 
when  I  find  a  great  principle  founded  in  an  observation  of  facts  and  ex- 
perience, I  am  not  afraid  to  follow  it  up  to  its  last  corollary.  The  states- 
man must  do  what  he  can  in  the  face  ot  tracUHon  and  prejudice  and  vested 
interests,  and  I  presume  that  i^  will  be  iong  before  the  public  will  be  so 
enlightened  as  to  demand  to  tee^  every  cent  that  it  pays  in  taxes  for  the 
very  sake  of  knowing  the  amount,  but  1  am  clear  in  regard  to  the  wisdom 
of  such  an  arrangement. 

In  the  further  lectures  which  I  am  to  give  I  propose  to  treat  the 
subject  historically  for  I  believe  that  the  tariff  history  of  the  United 
States  shows  most  clearly  some  of  the  worst  of  the  evils  of  the  system, 
and  I  think  that  every  one  ought  to  know  liow  this  system  has  grown  up 
and  been  fastened  upon  us. 


LECTURE  III 


The  Origii?  of  Peotectiois"  ik  this  Oountrt. 

The  war  oi  American  Independence  was  a  revolt  against  unjust 
taxation.  In  tlie  same  year  tlie  Declaration  of  Independence  was  adopted, 
and  Adam  Smith  published  his  "  Wealth  of  Nations."  They  were  two 
revolts,  one  political,  the  other  scientific,  against  the  prevailing  dogmas 
of  the  mercantile  system  of  political  economy.  They  were  twin  inci- 
dents in  the  revolt  of  modern  life  against  the  traditions  of  the  middle 
age.  It  is  at  once  a  pity  and  a  surprise  that  the  last  century  has  seen 
their  developments  diverge  instead  of  combining. 

The  revolt  of  the  American  colonies  was  against  the  "  colonial 
system,"  which  was  itself  only  a  part  of  a  grand  theory  about  the  rela- 
tions of  nations  as  regards  trade.  According  to  this  theory,  nations  were 
to  be  isolated  from  each  other.  They  were  not  regarded  as  merely  groups 
in  the  body  of  mankind,  having  common  interests,  but  as  distinct  and 
separate  bodies,  having  hostile  interests,  and  ruled  in  their  relations  to  one 
another  by  jealousy,  suspicion  and  desire  for  plunder.  Civilization  had 
advanced  so  far  that  these  motives  were  regarded  inside  the  nation  as 
barbarous  and  injurious,  but  they  still  prevailed  in  international  rela- 
tions. In  regard  to  trade,  it  was  believed  that  its  object  was  to  get  pos- 
session of  money — precious  metals — that  this  was  wealth,  and  that  only 
one  party  to  an  exchange  could  gain  by  it.  It  naturally  followed 
that  complicated  laws  were  made  to  control  trade  and  drive  it  into  the 
forms  which  men  thought  wiser  and  better  than  those  of  nature. 
Export  duties  were  laid  on  raw  materials  to  make  them  cheap  ;  bounties 
were  laid  on  exports  of  manufactured  goods  in  order  to  increase  exports; 
duties  were  laid  on  imports  to  diminish  them;  prohibitions  were  laid  on 
the  exportation  of  specie,  or  on  the  exportation  of  machinery,  or  on  the 
emigration  of  laborers.  Navigation  laws,  including  discriminating 
duties  and  tonnage  taxes  were  passed.  All  this  belonged  to  the  great 
system:  the  elfoct  was  to  isolate  nations,  to  rob  them  of  each  other's 
gains  in  literature  and  the  arts  and  scienceV  and  to  cut  off  all  that 
highest  development  which  comes  from  the  action  of  states  on  states. 

When  this  system  was  complete  and  the  barriers  were  established, 
nations  began  to  put  in  special  gates,  well  defended,  at  which  they  agreed 
to  let  each  other  in  and  out  for  special  forms  of  trade,  at  particular  times 
and  under  strict  regulations.     We  ask,  in  astonishment,  if  this  was  trade ; 


18  PROTECTION  m  THE  UNITED  STATES. 

if  men  really  believed  that  trade  ranst  be  watched  and  restrained  in  this 
way.  We  see  that  the  private  trader  cannot  make  his  place  of  business 
too  attractive,  nor  set  the  door  too  wide  open,  nor  make  the  approach  too 
easy,  nor  be  too  indifferent  as  to  who  comes,  or  how,  i:)rovideG.  he  comes 
for  honest  trade.  But  the  method  we  here  find  in  use  suggests  only 
dread,  suspicion  and  war.  The  machinery  is  tliat  of  a  fortress,  not  that 
of  a  market. 

The  colonial  system  was  only  a  part  of  this  system.  When  the  old 
States  had  all  been  thus  isolated  they  began  to  seek  possessions  in  the 
new  world,  with  which  each  for  itself  could  hold  free  trade  but  exclude 
all  others.  That  is,  foreign  commerce  was,  after  all,  a  good  thing,  and 
free  trade  was  a  good  thing,  if  you  could  hold  the  foreign  nation  in  sub- 
jection and  coerce  all  its  relations.  If  the  colony  could  be  used  for  the 
interest  of  the  mother  country,  freedom,  on  this  theory,  became  a  good 
thing  for  trade.  This  theory  liadan  obvious  weakness,  that  if  the  colony 
ever  got  strong  enough  it  would  not  endure  this  warping  of  all  its  ener- 
gies in  one  direction,  but  would  get  independence  in  order  to  come  into 
free  relations  with  other  nations  besides  its  mother  country.  Such  is 
the  actual  meaning  of  the  American  war  of  independence. 

It  would  seem  natural  that  the  emancipated  colonies  would  seek  free 
intercourse  with  all  nations,  and  it  is  a  very  curious  study  to  see  how  this 
logical  tendency  conflicted  for  years  after  the  revolution  with  inherited 
traditions  and  prejudices.  On  the  6th  February,  1778,  Gerard,  Franklin, 
Deane  and  Lee  made  a  treaty  of  alliance  and  also  a  treaty  of  commerce 
between  France  and  the  United  States.  In  the  latter  treaty  it  was  agreed 
to  avoid  "  all  those  burthensome  prejudices  which  are  usually  sources  of 
debate,  embarrassment  and  discontent,"  and  to  take  as  the  "  basis  of  their 
agreement  the  most  perfect  equality  and  reciprocity,'  They  further  re- 
fer to  the  general  principle  by  which  they  were  guided  as  that  of  "  found- 
ing the  advantage  of  commerce  solely  upon  reciprocal  utility  and  the  just 
rules  of  free  intercourse."  Up  to  this  time  the  principle  of  treaties  of 
commerce  had  been  that  two  nations  made  an  agreement  to  give  each 
other  special  and  exclusive  privileges.  The  Americans  introduced  this 
much  of  a  new  principle,  that  they  Avould  not  enter  into  those  compli- 
cated relations  by  which  Europe,  after  having  cut  off  all  natural  relations, 
had  set  up  special,  narroAv,  arbitrary  and  artificial  relations  between 
nations,  but  that  they  would  hold  themselves  open  to  the  freest  relations 
they  could  establish  with  all  parts  of  the  old  world. 

Hence  we  find  their  representatives  abroad  eagerly  pushing,  at  every 
opportunity,  for  chances  to  establish  commercial  relations.  They  met 
with  all  kinds  of  obstacles.  Old  habit  had  accustomed  nations  to  deal 
with  their  OAvn  colonies  only.  They  had  no  idea  what  good  things  the 
North  American  colonies  could  offer.     The  habit  of  suspicion  was  strong. 


PROTECTION  IN  THE   UNITED  STATES.  ly 

and  the  prevailing  notions  of  trade  led  them  to  apprehend  dangers  rather 
than  advantages  from  trade.  On  the  other  hand,  as  it  had  generally  been 
believed  that  England  had  gaiaed  great  advantages  from  her  colonies, 
there  was  great  eagerness  to  get  a  share  in  those  advantages  now  that  they 
were  free  and  open,  if  only  the  aspirants  had  been  able  to  find  out  what 
those  advantages  were  and  how  to  obtain  them. 

It  is  strange  to  read  the  correspondence  of  the  American  agents 
abroad,  and  to  see  how  they  argued  and  discussed  with  grave  ambassa- 
dors about  the  "loss"  which  one  nation  would  suffer  in  trading  with 
another,  any  shipment  of  specie  one  way  or  the  other  being  regarded  as 
an  infallible  sign  of  loss.  The  Americans  were  by  no  means  clear  in 
their  ideas,  and  did  not  combat  these  notions  on  principb,  but  apparently 
conicided  in  them.  They  sought  equality  and  reciprocity,  but  they  never 
rose  to  the  height  of  the  only  true  doctrine.  In  an  exchange  both  parties 
win,  or  else  obviously  one  would  refuse  to  trade.  '  If  then  one  party 
puts  obstacles  in  tlie  way,  the  total  gain  is  diminished,  the  diminution 
probably  being  divided.  If  the  ether  party  creates  an  obstacle,  the  gain 
is  still  further  diminished  or  destroyed.  It  is  a  matter  of  regret  there- 
fore when  .one  party  is  guilty  of  this  folly,  but  it  only  doubles  the  mis- 
chief, and  still  further  injures  the  other,  if  he  likewise  perpetrates  the 
same  folly.  This  is  the  answer  to  the  well  worn  and  stubborn  notion 
that  free  trade  must  be  reciprocal,  or  would  be  good  if  all  nations  would 
adopt  it.  One  nation  which  adopts  free  trade  gets  more  than  it  would  if 
it  put  on  restraints,  even  though  all  other  nations  may  have  restraints. 
It  will  share  the  gain  if  they  follow  its  example,  for  the  gain  is  multi- 
plied at  every  step,  but,  even  while  they  hold  back,  it  gains  as  much  as 
it  can  and  makes  the  best  of  a  bad  state  of  things,  while  waiting  for 
them  to  come  to  a  better  mind,  if  it  adopts  freedom.  What  would  be 
thought  of  a  grocer  who  refused  to  trade  with  the  hatter  who  would  sell 
him  the  best  hats  at  the  lowest  price,  because  the  hatter  did  not  buy  flour 
and  sugar  of  him  ? 

The  American  ministers  had  little  success  in  their  efforts  to  make 
treaties  such  as  I  have  described.  The  one  with  England  was  the  one 
most  eagerly  desired.  Under  the  prevailing  notions  the  English  had  ex- 
pected to  suffer  immense  losses  by  the  separation,  but  habit  and  the 
excellence  of  English  goods  revived  trade  immediately  after  the  war,  and 
the  trade  was  found  as  good  as  ever.  A  treaty  which  would  have  been 
eagerly  seized  in  1782  was  refused  in  1785.  They  did  not  care  for  any 
treaty. 

Here  we  come  to  the  first  case  in  which  currency  errors  became  in- 
tertwined with  errors   as  to   foreign  trade,    a  junction  which   has  run 
through  all  our  history  to  the  present  moment  and  which  has  been  pro- 
of mischief.     In  1781,  after  the  downfall  of  the  continental  currency. 


;;0  PROTECTION  IN  TEE  UNITED  STATES. 

specie  "became  very  abundant  here,  being  bought  by  both  French  and 
English.  The  States,  however,  still  had  vast  quantities  of  paper  afloat. 
As  soon  as  the  war  ended  this  specie  waa  all  exported  and  expended  in 
the  purchase  of  goods  long  missed.  The  export  of  specie  in  1783  was 
ten  millions.  The  import  of  goods  from  England  in  1785  was  10 
millions,  and  the  exports  3.9  millions.  In  1770  the  imports  were  8.5 
millions,  and  the  exports  4.5  millions.  This  explains  why  the  English 
were  so  well  satisfied  with  the  revival  of  trade. 

During  the  war  many  industries  liad  sprung  up  to  supply  the  wants 
of  the  people  for  manufactures  formerly  imported.  At  the  return  of 
peace  these  industries  were  prostrated,  and  a  cry  began  to  be  made  at  that 
time  that  the  country  could  not  stand  free  trade,  and  that  it  must  do  as 
England  had  always  done,  that  is,  imitate  the  old  restrictive  system.  The 
real  demand  was  that  some  way  should  be  found  by  law  to  continue  upon 
the  American  people,  by  their  own  act,  the  evils  which  the  war  had  in- 
flicted on  them.  We  shall  see  more  of  this  when  we  come  to  the  tariff 
of  1816.  Whatever  may  have  been  the  effect  of  peace  to  destroy  the  war 
mushrooms,  we  find  that  there  were,  in  1789,  manufactures  of  iron,  glass, 
paper  and  cloth  here,  which  were  boasted  of  as  strong  and  prosperous, 
and  propositions  were  made  by  competent  capitalists  for  mining  iron 
on  a  large  scale  in  Pennsylvania,  which  fell  only  on  account  of  the  tur- 
bulency  of  the  inhabitants  and  the  insecurity  of  titles. 

While  things  were  in  this  state,  Adams  wrote  from  England  in  great 
disgust  at  the  rejection  of  his  treaty,  and  urged  reprisals.  He  declared 
that  we  could  get  no  treaty  until  we  should  set  up  restrictions,  that  is, 
we  were  to  put  a  hindrance  in  the  way  in  order  to  make  a  bargain  for 
getting  English  obstacles  removed  by  promising  to  remove  ours.  Mas- 
sachusetts took  this  advice,  but  found  that  it  drove  trade  away  to  JSlew- 
port  and  Portsmouth.  Virginia  did  the  same,  and  found  that  she  had 
likewise  benefited  Maryland  and  North  Carolina. 

Meanwhile  the  government  of  the  Confederation  was  falling  to 
pieces,  and  was  a  pity  and  a  laughing  stock.  It  had  no  revenues  and 
could  not  pay  instalments  on  its  loans  as  they  fell  due,  nor  even  the 
interest  on  its  debt.  Misery  was  great  throughout  the  country,  owing 
to  paper  money  and  debt  and  the  losses  of  war.  The  people  were  dis- 
contented and  rebellious,  actual  disorder  occurring  in  Massacliusetts, 
Pennsylvania  and  North  Carolina.  The  Congress  was  begging  the  States 
to  lay  a  uniform  five  per  cent,  duty  to  provide  a  revenue  for  the  Confed- 
eration. The  question  of  import  tax  was,  therefore,  bound  up  with  the 
question  of  civil  order,  protection  to  manufactures,  foreign  commercial 
relations,  and  the  misery  arising  from  bad  currency  at  home.  Virginia 
having  tried  to  come  to  an  agreement  with  Maryland  to  enforce  a  com- 
nion  revenue  system  on  the  great  waters  of  those  States,  this  was  found 


PROTECTION  IN  THE   UNITED  8TATES  21 

to  be  impracticable  without  the  cooperation  of  other  States.  This  led 
to  the  Congress  of  Annapolis  in  1786,  which  was  only  a  commercial  con- 
vention, and  which  found  no  better  way  to  discharge  the  task  it  had 
undertaken  than  to  recommend  Congress  to  call  another  convention  in 
the  following  year  to  revise  the  Articles  of  Confederation ;  that  is,  to 
provide  lor  a  common  revenue  system,  and  for  "  the  regulation  of  com- 
merce," by  giving  the  general  government  permanent  power  for  those 
purposes.  The  Convention,  when  it  met,  made  a  complete  reconstruction 
of  the  Articles  of  Confederation  and  gave  us  the  present  Constitution. 
You  see,  then,  just  how  much  truth  there  is  in  the  assertion  that  the 
country  was  ruined  by  free  trade  during  the  Confederation,  and  that  the 
Constitution  was  made  to  give  protection. 

In  the  Constitutional  Convention,  the  question  of  free  trade  came 
tip  under  the  form  of  a  desire  for  a  navigation  law,  and  it  at  once  took 
a  sectional  form.  The  Eastern  States  wanted  the  Constitution  chiefly  in 
order  \n  get  such  a  law.  The  Southernmost  States  wanted  free  trade. 
The  positions  of  the  two  sections  were  inverted  in  regard  to  slavery, 
while  some  of  the  Middle  States  wanted  neither  navigation  laws  nor 
slavery.  It  was  one  of  the  compromises  of  the  Constitution  that  the 
power  to  regulate  commerce  was  inserted,  together  with  the  allowance 
of  the  slave  trade  until  1808  (under  the  permission  to  tax  slaves  not  over 
ten  dollars  per  head),  and  the  prohibition  of  export  duties. 

No  sooner  did  the  House  of  Eepresentatives  get  a  quorum  than  the 
subject  of  revenue  came  up,  and  no  sooner  was  the  subject  of  revenue 
taken  up  than  the  question  of  protection  was  raised. 

In  the  debate,  Madison  said : 
■  *  "  I  own  myself  the  friendof  a  very  free  system  of  commerce.  If  industry 
aild  labor  are  left  to  take  their  own  course  they  will  generally  be  directed 
to  those  objects  which  are  most  productive,  and  that  in  a  manner  more 
certain  and  direct  than  the  wisdom  of  the  most  enlightened  legislature 
could  point  out.  Nor  do  I  believe  that  the  national  interest  is  more  pro- 
moted by  such  legislative  directions  than  the  interest  of  the  individuals 
concerjped.  Yet  I  concede  that  exceptions  exist  to  this  general  rule, 
important  in  themselves,  and  claiming  the  particular  attention  of  this 
committee.  If  America  were  to  leave  her  ports  perfectly  free,  and  to  make 
no  discrimination  between  vessels  owned  by  citizens  and  those  owned  by 
foreigners,  while  other  nations  make  such  discrimination,  such  a  policy 
would  go  to  exclude  American  shipping  from  foreign  ports,  and  we  should 
be  materially  affected  in  one  of  our  most  important  interests." 

Again,  in  reply  to  Fitzsimmons,  of  Pennsylvania,  who  wanted  more 
protection,  and  wanted  to  discourage  luxury,  and  made  certain  proposi- 
tions to  that  end,  he  said  :  "  Some  of  the  propositions  may  be  productive 
of  revenue,  and  some  may  protect  our  domestic  manufactures,  though  the 


22  PROTECTION  IN  THE   UNITED  STATES. 

latter   subject,  which  involves  some  intricate  questions,  ought  not  to  be 
too  confusedly  blended  with  the  former." 

That  is  to  say,  he  was  one  of  those  who  believe  that  a  doctrine  can  be 
true  and  its  application  unwise,  and  he  thought  that  the  coercion  to  be 
exercised  on  somebody  else  by  doing  one's  self  a  a  injury  was  sufficient 
cause  for  submitting  to  suflfoinng.  He  also  tried  very  hard,  on  this  and 
subsequent  occasions,  but  fortunately  in  vain,  to  introduce  discriminating 
duties  as  between  the  nations  with  which  we  had  treaties  and  those  with 
which  we  had  none. 

Perhaps  the  most  remarkable  utterance  which  has  ever  been  made  in 
the  discussion  of  this  tariff  question  was  made  by  Fisher  Ames  in  this 
debate  of  1789.  He  said:  "From  the  different  situation  of  the  manu- 
facturers in  Europe  and  America,  encouragement  is  necessary.  In  Europe 
the  artisan  is  driven  to  labor  for  his  bread.  Stern  necessity,  witli  her 
iron  rod,  compels  his  exertion.  In  America,  invitation  and  encourage- 
ment are  needed.  Without  them  the  infant  manufacture  droops,  and 
those  who  might  be  employed  in  it  seek  with  success  a  competency  from 
our  cheap  and  fertile  soil."  For  a  man  to  adduce  the  facts  which  are  the 
grandest  argument  on  one  side  of  the  question  as  an  argument  on  the 
other  is  not  common,  and  that  a  man  like  Fisher  Ames  could 
do  it  is  a  proof  of  the  depth  to  which  long  rooted  notions 
can  affect  a  man's  mind.  The  argument  amounts  to  saying 
that  it  is  so  easy  for  laborers  to  get  a  living  in  America, 
that  we  must  make  it  hard  to  get  a  living  here  in  order  that  work  may 
be  done.  It  states  the  protectionist  position  in  America,  however,  with 
great  exactness.  The  cheap  and  fertile  soil,  by  nature,  holds  out  to  men 
of  the  artisan  class  a  competency  in  return  for  moderate  and  easy  labor. 
In  order  that  they  might  be  forced  to  work  at  manufactures,  which  were, 
in  the  nature  of  things,  less  remunerative  in  a  new  country  with  bound- 
less fertile  soil,  it  was  necessary  to  curtail  by  artificial  and  legal  arrange- 
ments the  profits  of  agriculture.  This  is  just  what  the  tariff  has  done 
from  1789  until  this  day.  We  are  more  familiar  with  the  argument 
under  tlie  form  of  the  comparative  rates  of  wages  here  and  abroad,  but  it 
comes  back  to  just  what  Ames  so  simply  stated.  The  competition  which 
the  protectionist  employer  has  had  to  contend  against  here  has  never 
been  the  cheapness  of  foreign  labor  ;  it  has  been  the  greater  return  which 
his  men  could  get  by  putting  the  same  labor  on  the  soil.  That  is  the 
only  meaning  of  the  high  wages  in  this  country.  What  makes  Avages 
high  ?  Where  do  they  come  from  ?  Or  why  is  it  that  artisans  are  told 
that  protection  makes  wages  high  ?  How  are  these  things  reconcilable  ? 
Or  how  is  it  that  the  foreign  labor  with  Avhicli  we  are  told  that  we  can- 
not compete  is  especially  that  of  England,  where  wages  are  higher  than 
anywhere  else  in  Europe  ?     Or  why  is  it  that  high-priced  labor  can  com- 


PROTECTION  IN  THE   UNITED  STATES.  ^3 

pete  here  in  agriculture  and  stand  three  or  four  thousand  miles  of  trans- 
portation ?  Wages  are  high  here  because  men  of  the  wages  class  can  get 
all  the  fertile  land  they  can  till  by  going  to  it ;  because  the  capital  re- 
quired is  very  small,  and  because  the  returns  are  almost  pure  reward  of 
labor.  Hence  they  will  not  go  into  the  wages  class  unless  the  induce- 
ment is  equal.  It  is  the  great  form  in  which  the  new  country  holds  out 
grand  opportunities  to  the  man  who  has  nothing  but  his  manual  labor  to 
depend  upon,  and  the  protective  system  does,  and  always  has  taken  away 
from  the  farmer,  laborer  and  artisan,  the  advantages  which  nature  offered 
him  in  the  new  country. 

To  return  to  the  tariff  debate  of  1789.  The  character  of  all  tariff  legis- 
lation in  this  country,  as  a  grand  grab  struggle  between  interests  and 
sections,  was  illustrated  then. 

The  South,  except  Georgia,  wanted  a  high  tariff  duty  on  rum,  for  reve- 
nue ;  the  Middle  States,  in  the  interest  of  temi^erance,  the  Eastern  States, 
for  protection  to  their  rum  distilleries.  Georgia  opposed  this  tax  because 
she  used  a  great  deal  of  rum,  and  bought  it  in  the  West  Indies  with  her 
lumber.  The  Southern  and  Middle  States  wanted  a  tax  also  on  molasses, 
but  this  the  Eastern  States  vigorously  opposed.  Molasses  was  the  raw 
material  of  rum.  It  was  bought  with  salt  fish,  lumber  and  staves  sent  to 
the  West  Indies.  Eum  was  itself  an  export  to  Africa.  Both  the  Eastern 
States,  in  this  case,  and  Georgia,  in  the  preceding,  felt  and  urged  the 
truth  which  the  South  urged  in  1832,  but  which  the  manufacturers 
scouted,  that  the  tariff  on  imports  would  diminish  the  trade  and  lessen 
the  exports ;  that  is,  cripple  the  "  home  industry."  Our  present  tariff 
is  unquestionably  acting  in  the  same  way  on  all  the  great  staple  agri- 
cultural industries  of  the  country  which  export  tlieir  product. 

The  South  opposed  the  tax  on  iron  and  steel,  as  all  agricultural  inter- 
ests must.  The  Pennsylvanians  replied  that  the  manufecture  was  already 
established  in  their  State,  and  that  a  slight  duty  would,  "  in  a  little  while," 
lead  to  a  great  production. 

The  South  wanted  a  protective  tax  on  hemp,  claiming  that  rice  and 
indigo  were  unprofitable.  Pennsylvania  opposed  any  tax  on  hemp  as  a 
raw  material  of  cordage,  but  wanted  a  tax  on  that.  New  England  op- 
posed the  tax  on  cordage  as  a  raw  material  of  ships,  but  wanted  protec- 
tion on  the  latter.  In  the  midst  of  this  wrangling  effort  to  invent  some  way 
by  law  to  enable  people  to  get  rich  in  the  country,  it  is  interesting  to  notice 
that  cotton  was  only  incidentally  alluded  to.  A  tax  of  three  '--nts  a 
pound  was  put  upon  it,  on  the  chances  that  it  might  come  to  something. 
Tliis  well  illustrates  the  amount  of  foresight  that  statesmen  can  ever  ex- 
ercise in  these  matters.  They  passed  over  an  article,  destined  by  natural 
circumstances  to  become  one  of  the  great  staples  of  the  country,  wliile 
they  were  looking  for  something  t.)  cjieourage,  and  when  tliey  found  such 


24,  PROTECTION  IN  THE   UNITED  STATES. 

au  article,  whose  value  lay  in  nature  and  fact,  it  was  totally  beyond  their 
puny  systems  of  artificial  aid. 

The  South  opposed  any  duty  on  spikes  or  nails.  Goodhue  replied  for 
New  England,  that  they  were  already  exported,  and  that  a  tax  would  soon 
produce  enough  for  all  North  America.  It  was  a  "  domestic  manufacture" 
in  chimney  corners.  "  Domestic  manufactures  "  was  a  term  then  used  for 
household  manufactures,  which  were  regarded  with  great  favor  as  a  de- 
sirable thing. 

For  twenty-five  years  after  this  time  protectionist  journals  gathered  in- 
stances of  farmers  whose  wives  or  daughters  spun  and  wove,  and  whose 
sons  spent  the  evening  in  making  nails  at  the  chimney  corner,  and  such 
journals  paraded  these  cases  as  glorious  instances  of  industry.  This  went 
on  long  after  machinery  liad  so  cheapened  these  manufactures  that  an 
hour's  farm  work  would  pay  for  more  goods  of  this  kind  than  people 
could  make  by  hand  in  a  day,  but  the  old  people  who  clung  to  the  method 
were  pointed  to  as  models,  and  the  young  people  who  preferred  printed 
calicoes  to  homespun  and  leisure  to  nail-making,  were  scolded  for  their 
extravagance.  This  opinion  had  no  necessary  connection  with  protec- 
tion, but  it  sprang  from  the  general  erroneous  point  of  view  that  we 
want  work  for  the  sake  of  work,  and  not  for  the  sake  of  results  ;  that  in- 
dustry is  a  good  thing,  not  because  it  produces  more  goods,  but  because 
it  is  work ;  that  the  ideal  of  life  is  not  abundance  with  leisure,  but  scarc- 
ity with  toil.  Hence  it  seems  wise  to  refuse  the  benefits  of  machinery 
owned  by  foreigners  in  the  first  place,  and  before  they  know  it,  those  who 
advocate  protection  to  bring  factories  into  being  are  applauding  those 
who  refuse  to  profit  by  the  machinery  when  established. 

New  England  and  Virginia,  which  latter  then  expected  to  become  a 
ship-building  State,  favored  navigation  acts  as  protection  to  shipping. 
The  other  States,  as  freight-payers  and  not  ship  owners,  objected.  A  dis- 
criminating tonnage  duty  was  laid,  and  ten  per  cent,  was  reduced  from 
duties  on  goods  imported  in  American  ships.  A  special  discriminating 
duty  was  laid  on  tea,  because  the  tea  trade  could  only  be  carried  on  by 
"a  drain  of  specie."  The  wars  in  Europe  and  the  increased  trade  of  neu- 
trals during  the  next  twenty-five  years  led  to  an  immense  increase  of 
American  shipping  independent  of  protection,  but  it  became  an  im- 
portant precedent,  as  I  shall  show,  in  the  tariff  debate  of  1816. 

The  tariff  of  1789  avowedly  adopted  the  principle  of  protection.  The 
preamble  read  as  follows :  "  Whereas,  it  is  necessary  for  the  support  of 
the  Government,  for  the  discharge  of  the  debts  of  the  United  States,  and 
the  encouragement  and  protection  of  manufactures,  that  duties  be  laid, 
&c."  It  was  declared  to  be  only  temporary  in  order  to  give  infant  indus- 
tries a  start,  and  was  limited  to  17!»(J.  The  duties  levied  under  it  were 
equivalent  to  an  ad  valorem  rate  of  8^  per  cent.     During  the  debate  some 


PROTECTION  m  THE   UNITED  STATES.  25 

fears  were  expressed  that  the  duties  might  be  so  high  as  to  encourage 
smuggling.  To  tliis  Mr.  Madison  replied  that  he  "  would  not  believe  that 
the  virtue  of  our  citizens  was  so  weak  as  not  to  resist  that  temptation  to 
smuggling  which  a  seeming  interest  might  create.  Their  conduct  under 
the  British  Government  was  no  proof  of  a  disposition  to  evade  a  just  tax. 
At  that  time  they  conceived  themselves  oppressed  by  a  nation  in  whose 
councils  they  had  no  share,  and  on  that  principle  resistance  was  justified 
to  their  consciences.  The  case  was  now  altered  ;  all  had  a  voice  in  every 
regulation,  and  he  did  not  despair  of  a  great  revolution  in  sentiment  when 
it  came  to  be  understood  that  the  man  who  wounds  the  honor  of  his 
country  by  a  baseness  in  defrauding  the  revenue,  at  the  same  time  exposes 
his  neighbors  to  further  impositions." 

This  tariff,  then,  was  the  thin  edge  of  the  wedge.  The  duties  were 
raised  the  next  year  so  as  to  equal  an  11  per  cent,  ad  valorem  rate,  and  in 
1792  they  were  raised  to  equal  Vi\  per  cent.  Between  the  tariff  of  1789 
and  that  of  1816,  a  period  of  twenty-six  years,  seventeen  acts  were  passed 
affecting  duties,  generally  and  steadily  raising  them. 

The  most  important  incident  in  this  early  tariff  history  was  Hamil- 
ton's report  on  the  manufactures,  December  5,  1791.  It  came  from  a 
man  who  held  and  deserved  high  authority  as  a  statesman,  and  it  dealt 
with  the  subject  in  a  comprehensive  manner.  It  has  been  the  arsenal 
from  which  our  popular  school  of  protectionists  have  borrowed  ever 
since.  Its  political  economy,  however,  is  very  erroneous,  and  defective  in 
many  fundamental  respects.  It  is  erroneous  as  to  wages,  and  it  confuses 
credit,  capital  and  money.  It  is  marked  throughout  by  the  errors  of  the 
old  mercantile  system,  hinging  all  its  views  of  foreign  trade  on  the  im- 
port or  export  of  specie  to  be  occasioned.  Thus  Hamilton  says:  "The 
West  India  Islands,  the  soils  of  Avhich  are  the  most  fertile,  and  the  nation 
which  in  the  greatest  degree  supplies  the  rest  of  the  world  with  the  pre- 
cious metals,  exchange  to  a  loss  with  almost  every  other  country." 

He  admits  the  force  of  the  broad  free  trade  arguments,  but  thinks 
that  while  other  nations  follow  the  restrictive  system,  the  United  States 
must  do  so.  He  speaks  of  the  hindrances  met  with  in  attempting  to 
export  American  products,  which  would  seem  to  point  to  a  general  con- 
viction of  the  mischief  of  the  entire  restrictive  system,  and  not  to  the 
conclusion  that  the  United  States  ought  to  adopt  the  same  policy. 
Though  led  to  advocate  protection  on  this  special  plea,  he  goes  on  to  try 
to  give  it  a  theoretical  justification.  We  shall  have  occasion  to  notice 
this  again;  but  I  beg  you  here  to  observe  the  difference.  If  the  argument 
was  made,  as  it  often  was  for  our  first  half  century,  that  free  trade  was 
good,  but  that  we  must  restrict  because  others  did,  it  would  follow  that 
we  ought  to  abandon  restriction  as  fast  and  as  far  as  others  did.  If  the 
argument  was  based  on  principle  and  theory,  it  would  be  good  any  time.. 


Mg  PROTECTION  IN  THE   UNITED  STATES. 

for  all  nations,  and  forever.  The  argument  of  expediency  was  used,  how- 
ever, as  in  this  report  of  Hamilton,  to  break  the  force  of  the  common 
sense  free  trade  view,  and  the  theoretical  argument  was  smuggled  in  be- 
hind it.  He  distinguishes  seven  particulars  in  which  he  thinks  protec- 
tion is  theoretically  advantageous.  Of  these,  three,  ''the  division  of 
labor,"  "aflFording  greater  scope  for  the  diversity  of  talents,"  and  "afford- 
in  o-  a  more  ample  and  various  field  for  enterprise,"  are  only  subdivisions 
of  the  o-reat  doctrine  of  the  "diversification  of  industry,"  and  may  be 
noticed  under  that  head.  The  issue  here  between  the  free  trader  and  the 
protectionist  depends  on  radically  different  views  of  human  society.  The 
question  is  whether  industry  diversifies  itself  as  chances  arise  under  the 
'  operation  of  natural  forces,  so  that  man  can  neither  hasten  the  process 
nor  retard  it  without  doing  injury ;  or  whether  the  legislature  must  be 
always  on  the  watch  to  discharge  a  heavy  responsibility  resting  upon  it, 
viz.,  to  tell  society  w^hen  and  how  to  adjust  itself  into  groups  for  in- 
dustrial purposes.  The  industrial  history  of  the  American  colonies 
offers  the  best  proof  in  the  world  of  the  truth  of  the  former  view.  There 
w^e  see  communities  growing  from  the  simplest  germ,  isolated  to  a  certain 
extent.  We  see  that  the  development  of  society  is  as  regular  and  as 
natural  as  that  of  a  plant,  and  there  is  no  more  need  of  human  interfer- 
ence than  there  is  to  make  a  bud  burst  into  a  blossom  at  the  proper 
moment.  It  is  a  development,  moreover,  which  cannot  be  hastened 
without  injury.  A  new  country  cannot  have  the  higher  social  develop- 
ments until  its  population  begins  to  grow  dense.  It  is  so  with  us  yet 
"We  have  not  the  literature  or  the  science  or  the  fine  arts  of  the  old 
countries,  but  we  have  not  their  poverty  and  misery.  We  must  take  our 
advantages  and  disadvantages  together. 

Now  the  diversification  of  industry  comes,  so  far  as  it  is  desirable  or 
advantageous,  of  itself.  We  must  wait  for  it  till  it  comes,  and  we  must 
take  it  when  it  comes.  The  South  will  rind  its  interest  in  cotton  culture 
as  a  great  prevailing  industry  for  a  long  time  to  come.  The  same  is  true 
of  the  wheat  of  the  West.  No  preaching  cau  induce  men  to  abandon  the 
industry  Avhich  is  the  most  lucrative,  and  no  law  can  make  them  do  it 
without  injuring  their  interest.  As  for  the  scope  for  varied  talents,  per- 
sons go  to  the  places  Avhich  offer  an  arena  for  their  talents.  They  do 
not  sit  still  and  say:  "Let  us  make  an  arena  here."  The  tendency  ot 
man,  as  transportation  is  made  easier  and  emigration  freer,  is  to  stop  trying 
to  coerce  nature,  and  to  put  himself  where  nature  spontaneously  aids 
liim.  As  for  the  division  of  labor,  it  is  just  as  great  and  just  as  advan- 
tageous, now  that  transportation  is  easy,  if  the  laborers  are  locally  dis- 
trilnited  as  if  they  are  industrially  distributed.  Look  at  the  distribution 
in  our  own   country.     The   South  raises  raw  materials,   the  West  raises 


PROTECTION  m  TEE   UNITED  STATES.  27 

food,  and  the  East  manufactures.    As  for  the  varied  field  of  enterprise, 
the  world  opens  that,  and  our  enterprises  seek  the  place  of  advantage. 

Hamilton  next  says  that  protection  extends  the  use  of  machinery. 
He  means  that  if  there  are  manufactures,  there  is  more  use  for  machinery 
than  there  is  in  agriculture.  On  this  view  you  do  the  business  to  use 
the  machinery,  you  do  not  use  machinery  to  do  the  business. 

JSText  he  argues  that  protection  furnishes  additional  employment  to 
classes  not  formerly  engaged  in  the  business.  This  is  the  argument  that 
protection  makes  work.  It  is  very  true  that  protection  makes  work,  but 
that  it  makes  more  work  without  making  more  product.  It  increases  the 
human  exertion  necessary  to  gain  the  same  amount  of  good. 

He  had  in  view  domestic  work  auxiliary  to  adjacent  manufactories. 
He  thinks  that  the  factories  offer  employment  to  the  wives  and  children 
of  farmers,  in  work  which  they  can  do  at  home.  He  refers  to  the  chil- 
dren employed  in  factories  in  England,  and  he  thinks  that  the  farmer's 
income  might  be  enlarged  by  this  aid.  Let  us  realize  the  facts.  An 
American  farmer  could,  by  virtue  of  the  advantages  of  the  new  country, 
if  untrammeled  by  interference,  support  himself  and  a  family  by  his  own 
labor,  Earm  work  furnishes  opportunity  for  the  participation  of  all  the 
family  to  a  certain  degree.  Beyond  that  the  farmer  could  give  his  Avife 
leisure  for  the  culture  and  accomplishments  of  life.  He  could  also  sup^iort 
his  children  up  to  maturity,  giving  them  a  long  and  complete  education. 
Now  adopt  the  protective  system  and  put  up  a  fostered  industry  by  the 
side  of  his  farm.  I  think  it  very  likely  that  you  would  soon  find  his  wife 
spending  her  time  over  work  from  the  factory,  and  his  children  curtailed 
of  their  time  of  education  and  sent  to  work  in  it.  It  would  be  found 
necessary  to  take  some  such  step  to  keep  up  the  fam%"  income  to  the  old 
figure.  Work  would  be  made  for  the  wife  and  children,  and  the  amount 
of  that  work  which  they  would  be  obliged  to  do  would  be  no  unfair 
measure  of  the  harm  the  restrictive  system  had  inflicted  on  the  farmer. 
The  protective  system  simply  lowers  the  social  attainments  of  farmers 
and  fiirmers'  wives,  and  lessens  the  degree  of  education  to  which  farmers' 
children  can  aspire. 

The  next  object  which  Hamilton  thought  that  a  protective  system 
could  attain  was  the  promotion  of  immigration.  Tho  best  examination 
of  this  claim  is  to  look  at  the  f\ict  as  to  what  immigration  has  taken 
place.  Of  course  protection  cannot  be  credited  with  any  other  immigra- 
tion than  that  which  has  taken  place  amongst  workmen  in  the  protected 
industries.  The  total  immigration  for  fifty-one  years,  from  1820  to  1870, 
was  7,800,000.  Of  these  4,800,000,  or  61  per  cent.,  had  no  occupa- 
tion or  stated  none.  They  were  mostly  women  and  children  and  laborers, 
supplying  manual  labor,  which  the  new  country  demanded  in  large  quan- 
tities.    The  next  largest  number  was  of  laborers  so  reported,  1,300,000- 


28  PROTECTION  IN  THE  UNITED  STATE 8. 

The  next  number  was  of  farmers,  900,000,  bearing  witness  to  the 
attractions  of  the  natural  advantages  of  the  country  simply.  The  next 
number  was  of  mechanics,  not  specified,  500,000.  Of  the  others,  the 
only  ones  possibly  included  in  protected  industries  were,  miners,  92,181 ; 
weavers  and  spinners,  14,790  (of  whom  nearly  half  came  between  1830 
and  1840,  when,  as  is  well  known,  large  numbers  of  persons  in  these 
trades  came  from  England  on  account  of  the  introduction  of  machinery, 
and  sought  other  employment  here) ;  manufacturers,  4,520.  Now,  if  we 
look  at  the  half  million  mechanics,  we  find  that  very  few  of  them  belong 
to  industries  which  are  protected.  For  the  sake  of  a  closer  examination, 
take  a  year  of  high  protection  and  very  large  immigration,  1870.  The 
total  immigration  was  387,203.  Of  these,  those  classified  as  "  skilled 
workmen,"  numbered  31,964.  Of  these,  8,061  were  "  mechanics  not 
stated,"  leaving  say  24,000.  The  largest  numbers  amongst  these  were, 
blacksmiths,  2,378;  carpenters,  4,421 ;  masons,  2,190 ;  shoemakers,  1,557 ; 
tailors,  1,660  (none  of  whom  certainly  profited  by  protection) ;  miners, 
4,763;  weavers,  1,178  (who  came  into  more  or  less  protection).  The 
others  who  belonged  to  protected  industries  were,  brewers,  362  ;  cutlers, 
5  ;  distillers,  2;  file-makers,  2  ;  gunsmiths,  2;  hatters,  58  ;  hoemaker,  1 ; 
instrument  maker,  1 ;  iron  workers,  3;  jewelers,  409;  nailmakers,  19; 
potters,  8;  printers,  180;  puddlers,  2;  rope-makers,  3;  saddlers,  167; 
shipwrights,  9;  soap-makers,  2 ;  spinners,  7;  tanners,  102;  wool-sorter, 
1 ;  operatives,  23 ;  shepherds,  23.  Out  of  a  total  of  387,203  immigrants, 
the  number  who  came  to  make  articles  which  either  could  be  or  were 
protected  was  6,960,  or  less  than  two  per  cent.  It  appears  that  protec- 
tion has  not  drawn  immigrants,  as  a  matter  of  fact. 

Hamilton's  next  point  is  that  protection  secures  a  more  certain,  and 
steady  market  for  the  products  of  the  soil.  This  is  the  notion  of  the 
"  home  market."  Hamilton  urged  it  on  the  ground  that  foreign  restric- 
tions hindered  the  exportation  of  an  agricultural  surplus.  He  thought  it 
necessary  for  government  to  take  the  matter  in  hand  and  provide  or 
secure  a  home  market.  Obviously  it  is  an  advantage  to  any  new  country 
to  increase  its  inhabitants.  If  such  increase  took  place  anywhere  there 
must  follow  an  increased  production. 

Now,  for  the  sake  of  brevity,  I  will  state  in  general  terms  what  hap- 
pens, although  every  proposition  might  be  illustrated  abundantly  from 
our  own  colonial  liistory.  The  industries  which  begin  first  in  a  new 
country  are  those  which  the  economists  call  "extractive  industries." 
They  require  little  capital,  and  admit  of  little  division  of  labor.  They 
are  agriculture,  lumbering,  hunting  or  trapping,  fishing  and  mining. 
Some  mechanics  are  needed  in  the  building  trades.  In  regard  to  these 
persons,  one  principle  I  have  already  stated  was  illustrated  in  the  early 
history  of  Massachusetts.     They  would  not  work   except  at  wages  which. 


PROTECTION  IN  THE  UNITED  STATES.  29 

would  equal  the  remuneration  which  they  could  get  in  the   industries 
mentioned.     The  way  the  Puritans  tried  to  deal  with  the  problem  was  to 
fix  wages  by  law,  but  the  men  either  took  to  agriculture,  or  went  on  to 
other  settlements  where  there  was  no  such  law.     At  first,  every  farmer  is 
his  own  wheelwright  and  blacksmith  and  carpenter.     As  the  population 
increases  there  is  a  surplus  of  agricultural  products.     Some  who  have 
greater  skill  or  taste  for  the  mechanical  arts  work  in  those  occupations 
for  others  until  the  division  of  labor  becomes  established  gradually  and 
naturally.     Some  products  are  exported,   being  raw  materials  of  great 
demand.     Manufactured   goods,  cloth,  tools,  books,  paper,  and  all  the 
comforts  and  conveniences  of  the  old  life  of  the  colonists  are  imported  in 
exchange.     Some  become  merchants  to  carry  on  this  exchange,  and  build 
a  town  at  the  seaport.     At  first,  clergymen  and  schoolmasters  may  be  the 
only  professional  men,  and  they  act  as  lawyers  and  doctors.      All  ]3artici- 
pate  in  legislation ;  merchants  do  all  the  banking.     As  the  population 
increases  and  the  country  fills  up  the  extractive  industries  become  less 
lucrative.     The  sources  for  some  of  them  become  exhausted,  the  supplies 
of  others  become  superabundant.     Farming  itself  undergoes  subdivisions 
and  refinements.      Orchards    are    planted   for  fruit,    and  gardens    for 
vegetables.     Stock  raising  becomes  profitable,  and  dairy  farming  is  ex- 
tended.    Simultaneously  with  this,  without  any  dividing  line,  or  any 
exertion  whatever,  the  simple  mechanic  arts  which  existed  at  the  outset 
grow  into  independent  manufactures,  according  to  the  circumstances  of 
the  case.     It  depends  on  the  distance  of  the  colony,  the  facility  of  trans- 
portation, the  market  for  its  surplus  abroad,  the  amount  of  land  open, 
how  soon  or  how  rapidly  this  social  organization  will  be  developed.    If 
foreign  nations  all  had  severe  restrictions  upon  the  entrance  of  the  goods 
this  country  wanted  to  export,  they  would  put  just  so  much  premium  on 
the  early  development  of  manufactures  there.     The  whole  tendency  of  a 
surplus  supply  of   food  would  be  to  force  some  of   the  producers    of 
it   to    seek  some   other   employment,  in    which    they    would    produce 
other  things  to  exchange  with  their  neighbors  for  food.     Every  refusal  of 
a  foreign  country  to  take  the  only  things  the  new  country  could  ofier 
in  exchange  for  its  goods  would  throw  the  inhabitants  back  on  their 
neighbors  to  supply  the  want  by  such  exchange.     Every  such  act  would, 
moreover,  diminish  the  value  of  the  surplus,  that  is,  would  increase  the 
amount  which  the  farmer  could  afford  to  give  his  neighbor  for  making  his 
cloth  and  iron  for  him.     The  "home  market"  would  thus  "provide'* 
itself,  if  it  was  wanted,  and  the  want  itself  would  be  the  result  of  foreign 
errors,  injuring  in  just  so  far  the  community  in   question.     If  one  of 
their  own  statesmen  took  it  into  his  head  that  it  was  his  business  to  pro- 
vide a  home  market,  he  could  only  do  it  by  adopting  the  restrictive  sys- 


3C  FROTEVTION  IN  THE   UNITED  STATEti. 

tern,  and  still  further  depressing  the  profits  of  agriculture,  and  thus  accel- 
lerating  the  mischievous  process  already  at  work. 

The  repeal  of  the  corn  laws  in  England  was  accordingly  a  great  blow 
to  American  manufactures,  because  it  allowed  American  agriculture  to 
come  to  a  part  of  its  natural  rights,  and  we  have  been  trying,  ever  since 
1861,  to  neutralize  this  by  heavier  pressure  of  taxation.  That  same  re- 
peal, however,  took  away  all  Hamilton's  argument,  and  the  general  argu- 
ment has  since  been  altered.  We  have  been  told  lately  that  protection  is 
to  bring  the  manufacturer  and  the  farmer  near  together  ;  to  give  the  far- 
mer a  market  near  his  own  door,  and  in  various  Avays  the  export  of  agri- 
cultural produce  has  been  represented  as  an  evil.  But  when  we  talk  of 
"  bringing  "  the  manufacturer  and  farmer  together,  it  may  fairly  be  asked : 
Who  is  to  "  bring  ?"'  This  is  language  for  an  Assyrian  king,  deporting 
inhabitants  from  one  part  of  a  country  to  anotber.  If  the  manufacturer 
finds  the  conditions  of  successful  industry  lead  him  to  a  certain  spot,  well 
and  good.  That  spot  will  enjoy  the  benefit  of  its  peculiar  advantages. 
But  if  it  has  no  such  advantages,  and  Ave  plant  a  factory  there,  sball  we 
thereby  give  them  to  it  ?  Shall  we  ever  get  back  the  expended  force  ? 
Shall  we  not  rather  sufier  loss  so  long  as  the  artificial  creation  stands  where 
it  ought  not  to  be  ?  Will  not  that  loss  come  out  of  the  legitimate,  sound 
and  healthy  industries  "<*  The  error  is  in  thinking  that  we  ever  can  get 
out  of  an  artificial  creation  any  more  than  we  put  into  it;  it  is  only  when 
we  get  nature  to  work  with  us  and  for  us,  that  we  can  get  anything  gra- 
tuitously. The  American  farmer  has  long  ago  found  that  there  cannot  Le 
two  prices  in  the  same  market ;  that  he  does  not  get  any  different  price 
for  his  wheat  if  consumed  next  door  from  that  which  he  gets  if  it  is  con- 
sumed in  Manchester.  He  rarely  kncTC  where  it  is  consumed  and  never 
cares.  ^ 

The  wTiole  idea  of  advantage  in  bringing  farmer  and  manufacturer  to- 
gether is  a  delusion.  It  is  much  more  important  to  bring  the  various 
manufacturers  together,  because  they  form  groups  which  assist  and  sus- 
tain each  other,  and  it  is  important  to  bring  them  to  the  country  or  place 
where  the  conditions  of  success  exist.  This  place  Avill  not  be  where  the 
profits  of  capital  and  the  wages  of  labor  in  either  agriculture  or  commerce 
are  exceptionally  high.  Hence  to  carry  a  factory  by  force  into  an  agricul- 
tural district  will  be  to  ruin  the  factory  and  not  help  the  farmer.  Where 
the  profits  of  one  industry  far  exceed  those  of  all  others,  we  have  thai  one 
only.  Wbere  the  profits  of  several  are  equal,  we  have  them  all.  The  ad- 
vantages and  disadvantages  of  either  state  of  things  are  about  equal. 

Hamilton  next  proceeds  to  consider  the  objection  to  manufactures, 
that  they  are  impossible  here  on  account  of  the  dearness  of  labor  and  the 
scarcity  of  capital.  He  reduces  both  these  objections  to  a  minimum,  but 
shows  thereby  that  protection  was  not  necessary,  and  proves  finally  that 


FEOTECTION  IN  THE  UNITED  STATES.  yi 

manufactures  were  possible  by  enumerating  many  which  were  already 
thriving.  In  fact  the  country  became  very  prosperous  in  1789  and  1790 
so  soon  as  civil  order  was  secured. 

Further  on  again  lie  urges  an  argument  which  is  especially  interest- 
ing because  at  a  later  time  it  became  very  popular:  that  protection 
lowers  prices  through  the  home  competition.  One  is  impelled  to  ask 
why,  then,  those  interested  desire  it.  Who  would  urge  Government  in- 
terference to  lower  the  price  of  his  goods  ?  If  the  Government  should  so 
act,  who  would  not  cry  out  to  be  "  let  alone  "  ?  jSTevertheless,  the  asser- 
tion is  not  without  truth,  only  it  is  not  all  the  truth.  The  first  effect 
of  a  tariff  is  to  draw  many  persons  into  the  protected  industries  who 
believe  that  the  tariff  gives  them  full  margin,  and  that  special  knowl- 
edge, or  business  care,  or  sagacity  in  choice  of  situation  are  not  neces- 
sary. Factories  are  built  extravagantly,  or  in  bad  situations.  There 
follows  large  production,  a  glut,  a  fall  in  prices,  perhaps  even  below  foreign 
prices.  Then  come  failures  of  those  who  have  been  most  reckless.  Then 
the  remaining  strong  firms  continue  and  adopt  rules  to  "'limit  produc- 
tion," the  necessary  manipulation  of  any  monopoly.  Prices  rise  again  on 
a  limited  supply,  and  the  operation  is  repeated  unless  the  combination 
is  really  strong  enough  to  keep  others  out.  These  fluctuations  are  the 
real  character  of  a  tariff  system,  not  either  high  prices  or  low  prices,  and 
they  are  one  great  reason  why  protection  does  not  protect. 

Hamilton  next  considers  the  means  of  protection^  of  which  he 
enumerates  eleven.  These  are  import  duties,  prohibition  on  imports, 
prohibitions  on  exports,  bounties,  premiums,  drawbacks,  patents,  inspec- 
tion laws,  facilitation  of  remittances,  and  improvements  in  transporta- 
tion. 

It  is  worth  while  to  notice  and  pay  tribute  to  the  good  faith  of  this 
statesman,  who,  however  mistaken,  believed  that  he  was  working  for  his 
country's  good.  He  was  not  an  advocate  of  a  special  interest,  and  he,  at 
any  rate,  treated  his  subject  philosophically.  You  have  here  the  whole 
system  of  interference  logically  carried  out.  Bounties,  patents,  premiums, 
inspection  laws,  Government  banking,  and  subsidies  to  transportation — 
all  belong  to  one  consistent  theory,  and  you  are  dealing  with  a  man  who, 
at  any  rate,  could  seize  a  principle  and  either  pursue  it  as  true  or  abandon 
it  as  false.  The  issue  comes  squarely  before  you.  Either  it  is  the  busi- 
ness of  Government  to  do  all  these  things  or  none.  You  either  want  a 
paternal  Government  or  you  want  a  Government  which  is  merely  a 
reserved  force  in  behalf  of  peace,  justice  and  security,  and  which  is  at  its 
best  when  it  has  the  least  occasion  to  act.  Hamilton's  scheme  has 
been  very  unequally  carried  out.  Export  duties  are  forbidden  in  the 
Constitution.  Bounties  on  exports  we  have  never  directly  employed. 
Drawbacks  are  substantially  the  same  thing,  although  they  are  professedly 


^^  PROTECTION  IN  THE  UNITED  STATES. 

intended  to  counterbalance  duties  on  raw  materials.     Direct  bounties 
aiid  premiums  we  have  not  used,  because  the  loss  would  be  too  distinctly 
seen.     For  that  reason,  however,  they  would  be  the  best  arrangement  of 
all  if  we  were  to  go  into  the  system  at  aJh     By  the  census  of  1870,  the 
laborers  engaged  in  manufacturing  pig-iron  numbered  altogether  27,554, 
and  their  wages  amounted  to  $12,400,000.     The  capital  employed  is  re- 
turned at  $56,100,000.     We  are  pointed  to  this  as  a  great  industry — a 
grand  thing  to  have.     The  duty  was,  when  the  census  was  taken,  $9  per 
ton,  and  the  market  price  of  American  over  imported  iron  showed  that 
this  sum  was  directly  added  to  tlie  cost  of  ail  Ave  used.     Tlie  product  of 
the  home  manufacture  was  2,000,000  tons,  on  which  the  tariff  cost  us 
$18,000,000,  of  which  the  public  treasury  got  not  one  cent.     Seven  per 
cent,  on  the  capital  in  pig-iron  manufacture  would  be  $3,900,000,  which, 
with  the  wages  paid  to  laborers  in  that  trade,  would  make  $16,000,000. 
If,  therefore,  we  had  mf!,de  a  bargain  with  the  fig-iron  manufacturers  to 
let  their  cajaital  decay,  paying  them  seven  per  cent,  on  it,  and  with  the  peo- 
ple employed  to  stay  idle  while  we  paid  them  their  full  wages,  provided 
that  we  might  have  our  iron  free,  we  should  have  made  $3,000,000  per 
annum,  to  say  nothing  of  the  fact  that,  at  the  lower  price,  we  might  have 
afforded  a  much  larger  consumption  of  iron.     We  should,  moreover,  have 
liad  509  steam  engines  to  apply  to  other  work.    We  should  have  saved 
$18,000,000  worth  of  coal,  charcoal  and  coke  for  other  uses,  and  we  should 
have  loft  4,000,000  tons  of  iron  ore  in  the  ground  for  those  who  come 
after  us  to  use  when  they  can  do  it  profitably.     All  this  is  on  the  jiro- 
tectionist  hypothesis  that  this  industry  would  not  have  existed  but  for 
tlie  tarifi,  a  hypothesis  which  I  by  no  means  admit.     Now,  if  we  had 
had  a  bounty  on  iron,  instead  of  a  tariff,  these  fiicts  would  be  far  more 
generally  known  than  they  are.    Inspection  laws  have  been  gradually 
laid   aside,  because  they  interfere  with  trade.      They  are  ostensibly  in 
the  public  interest,  and  far  less  objectionable  than  the  other  means  men- 
tioned;   but  here  the  cry  has  been  raised  to  be  "let  alone."      Patents 
we  have  extended  more  and  more,  until  any  plea  which  may  be  made 
for  them  is  overwhelmed  under  their  abuse.     The  other  devices.  Govern- 
ment banking  and  subsidies,  we  are  still  struggling  with. 

I  have  spent  so  much  time  and  attention  on  this  paper  of  Hamilton, 
because  it  has  been  historically  of  very  great  miportaiice.  It  is  the  best 
statement  of  the  protectionist  argument  ever  made,  and  demands  this 
much  attention  in  any  general  discussion  of  the  question.  In  the  ten 
years  following  its  preparation,  during  which  Hamilton,  either  directly  or 
indirectly,  controlled  the  financial  policy  of  the  Government,  it  was 
found  necessary  to  raise  greater  and  greater  revenue.  Hamilton  had,  in 
presenting  lii:.  plan,  been  very  careful  to  delino  the  limits  within  which 
he  thought  that  the  means  he  proposed  might  be  safely  and  wisely  em- 


PROTECTION  IN  THE   UNITED  STATES.  33 

ployed.  ,In  his  further  financial  steps  he  by  no  means  extended  and  ad- 
vanced the  import  duties  with  a  view  either  to  revenue  or  protection. 
He  introduced  internal  and  direct  taxes  for  the  avowed  purpose  of  estab- 
lishing a  well  balanced  system  of  taxation.  These  taxes  were  all  repealed, 
on  Jefferson's  accession  in  1803.  Hamilton  also  prepared  the  system  for 
assessinor  and  collectins:  internal  taxes  which  was  revived  in  the  second 
war  with  England,  and  again  during  the  late  war.  Its  reintroduc- 
tion  on  each  of  these  occasions  took  time,  involved  great  delay  and  incon- 
venience, and  caused  expense  which  would  have  gone  far  to  pay  for  keep- 
ing it  up  during  the  interval. 


LECTURE   IV. 


The  Establishment  of  Peotection"  in"  this  CotiNTET. 

In  my  last  lecture  I  sketched  the  origin  of  the  protective  system  in 
this  country.  I  now  proceed  to  describe  its  growth  and  establishment. 
This  was  brought  about  by  incidents  connected  with  the  Napoleonic  wars. 
The  wars  of  the  French  revolution,  and  those  which  followed,  produced 
great  effects  upon  the  trade  of  the  civilized  world.  The  United  States,  as 
the  chief  neutral  carrier,  saw  its  shipping  multiplied  and  its  mercantile 
interests  enriched.  The  belligerents,  in  their  struggles  to  injure  each 
other,  endeavored  to  put  a  stop  to  this  neutral  traffic,  and  inflicted  great 
injury  on  the  neutral  who  was  carrying  it  on.  Nevertheless,  the  profits 
were  so  great  that  the  Americans  continued  it,  in  spite  of  losses.  When 
war  broke  out  again  in  1803,  the  indignation  here  at  the  collisions  which 
took  place  was  so  great,  that  measures  of  resistance  and  retaliation  were 
sought.  The  federalists  wanted  to  put  the  country  in  a  state  of  defence 
and  build  a  navy  to  protect  commerce.  They  represented  the  North- 
eastern States  and  the  shipping  interests.  The  administration,  however, 
with  the  great  majority  from  the  Middle  and  Southern  States,  demanded 
a  navy,  sought  to  reduce  expenditures,  and  turned  its  attention  to  meas- 
ures of  coercion  by  commercial  war.  These  measures  had  been  tried  with 
sad  results  during  the  revolution,  Mr.  Madison  had  urged  discriminat- 
ing duties  in  the  first  tariff  as  a  means  of  forcing  foreign  nations  to  grant 
reciprocity,  and  he  had  urged  coercive  and  retaliatory  measures  of  that 
kind  during  Washington's  administration  when  hostilities  in  Europe  first 
broke  out.  It  is  astonishing  what  faith  was  entertained  in  such  measures. 
You  see  it  still  strong  in  the  Soutli  when  the  civil  wai-  broke  out,  when 
it  was  believed  that  withholding  cotton  would  force  European  nations  to 
intervene. 

In  1805  an  act  was  passed  for  prohibiting  the  importation  of  English 
manufactures  in  order  to  force  England  to  give  up  impressment,  and  in 
order  to  support  Pinkney  and  Munroc  in  their  efforts  to  make  a  treaty. 
In  1806  England  blockaded  the  northern  coast  of  Europe  from  Brest  to 
the  Elbe.  Napoleon  retaliated  by  the  Berlin  Decree.  In  the  next  year 
England  replied  by  the  orders  in  council ;  Napoleon  rejoined  by  the  Milan 
Decree,  and  England  returned  once  more  by  more  stringent  prohibitions. 
The  tenor  of  these  decrees  on  the  one  side  and  on  the  other  was  to  pro- 
hibit neutrals  fron;  iraJing  with  the  enemy,  or  to  put  such  trade  under 


PROTECTION  IN  THE   UNITED  STATES.  35 

heavy  restraints.  Napoleon  was  trying  to  shut  the  continent  against 
English  manufactures,  and  England  was  trying  to  keep  out  of  the  conti- 
nent provisions  and  colonial  supplies.  Between  the  two,  neutral  com- 
merce suffered  the  greatest  loss  and  vexation.  The  American  shipowners 
complained  and  called  on  their  government  for  protection.  The  meas- 
ure adopted  was  the  embargo  of  1807,  by  which  the  shipowners  were  pro- 
tected against  foreign  aggressors  by  being  shut  up  at  home.  They  had 
before  incurred  heavy  risks,  now  their  own  government  imposed  certain 
ruin.  It  was  necessary  to  pass  one  act  after  another,  making  the  embar- 
go more  stringent  and  tyrannical  in  order  to  check  evasions  of  it.  It  was 
repealed  in  a  little  over  a  year,  but  non-intercourse  and  non-importation 
acts  were  substituted  for  it  until  war  grew  out  of  it  in  1812. 

We  are  concerned  with  this  commercial  war  here,  not  on  account  of 
its  folly  or  imbecility,  although  it  well  represents  the  folly  of  all  restric- 
tion, but  on  account  of  its  connection  with  the  strand  of  history  which 
we  are  following.  Embargo,  non-intercourse,  and  war,  lasting  from 
1807  to  1815,  created  an  entirely  artificial  state  of  things  here,  or,  per- 
haps I  should  say,  the  United  States  was  drawn  into  the  distortion  and 
perversion  of  industry  and  commerce  which  the  great  wars  were  produc- 
ing in  Europe.  Manufactories  of  various  kinds  sprang  up  here  to  supply 
the  wants  of  the  people  when  cut  off  from  the  usual  sources  of  supply  by 
foreign  exchange.  They  produced  articles  of  inferior  quality  or  design, 
generally  speaking,  but  people  had  to  be  satisfied  with  them.  In  many 
cases  also  the  products  were  dearer  than  those  normally  obtainable  abroad. 
They  were  sustained  by  the  artificial  diflBculties  in  foreign  exchange,  and 
by  the  diminished  profits  of  other  industries  which  would  have  been  more 
profitable  here.  In  1810,  Gallatin,  Secretary  of  the  Treasury,  made  a  re- 
port in  which  he  stated  that  manufactures  of  wood  and  leather,  amongst 
other  things,  were  exported  beyond  the  imports,  that  the  following  indus- 
tries were  "  firmly  established,"  iron  and  manufactures  of  iron,  manufac- 
tures of  cotton,  wool  and  flax,  paper,  printing  types,  books,  several  man- 
ufactures of  hemp,  and  a  few  others.  In  that  year  (1810)  some  effort 
was  made  to  get  more  protection  through  duties,  but  nothing  came  of  it. 
The  same  effort  played  some  share  in  bringing  about  the  war,  which  was 
a  product  of  intrigue,  and  as  needless  as  it  was  fruitless.  One  of  the  first 
war  measures  was  to  double  all  duties  and  prohibit  the  import  of  English 
prodiicts.  During  the  war  the  prices  of  manufactured  articles  were  very 
high.  Manufacturers  made  great  profits  and  factories  were  built  in  large 
numbers.  In  1814  all  the  banks  suspended  specie  payments,  and  then 
followed  a  reckless  paper  money  period  which  has  never  been  equalled 
since.  Prices  rose  higher  than  ever,  and  here  we  have  again  an  illustra- 
tion of  the  observation  previously  made  that  our  currency  and  tariff  errors 
have  been  intertwined  throughout  our  history. 


36  PROTECTION  IN  TEE   UNITED  STATES. 

Observe  now  the  outcome  of  all  tliis  for  the  matter  of  our  investiga- 
tion. Embargo  and  war  had  created  a  false  and  artificial  state  cf 
things  in  wliich  much  capital  had  been  invested  in  manufactures,  and 
"  industry  "  had  been  "  encouraged."  Under  the  false  light  in  which  they 
were  viewed,  embargo  and  war,  therefore,  seemed  to  be  beneficial  forces. 
The  return  of  jieace,  if  it  reopened  trade  and  let  things  return  to  their 
normal  condition,  would  be  a  calamity.  It  was  necessary  to  secure  a  con- 
tinuance of  the  circumstances  which  had  brought  these  industries  into 
existence,  in  order  to  secure  them  from  destruction.  Such  continuance 
could  not  be  brought  about  without  perpetuating  for  the  great  body  of 
consumers  the  scarcity,  loss  and  distress  of  war,  so  far  as  war  afiected 
their  power  to  procure  and  enjoy  industrial  products.  This  then  is  exacuy 
what  the  tariflT,  which  was  adopted  in  1816,  did  do.  It  saved  a  part  of  the 
capital  involved  in  manufactures,  although  most  of  it  was  swept  away  in 
the  financial  crisis  which  ensued  in  1819,  on  the  collapse  of  the  paper 
system,  but  it  burdened  the  nation  with  the  same  trammels  which  em- 
bargo and  war  had  laid  upon  it. 

The  act  of  May  3d,  1815,  repealed  all  discriminating  duties  and  ton- 
nage taxes  in  favor  of  any  nation  which  should  take  similar  action  with 
regard  to  American  vessels  and  cargoes.  Here  we  have  a  fact  of  interest 
to  the  general  history  which  we  are  pursuing.  This  was  what  was  known 
as  the  '^  American  system,"  at  this  time.  We  saw  how,  in  the  treaty  with 
France  in  1778,  the  Americans  set  out  to  gain  general  reciprocity.  That 
came  to  be  called  the  "American  system,"  viz.,  general  reciprocity 
instead  of  the  old  commercial  treaties.  Now  the  plan  of  laying  counter- 
vailing duties  to  enforce  reciprocity  came  to  be  called  the  "  American 
system,"  and  was  so  called  until  1824,  when,  by  a  still  further  perversion, 
that  name  was  applied  to  the  system  of  protective  duties.  Daniel  Webster, 
at  that  time,  well  said  of  it:  "This  favorite  American  policy  is  what 
America  has  never  tried ;  and  this  odious  foreign  policy  is  what,  as  we 
are  told,  foreign  states  have  never  pursued." 

The  act  of  February  5th,  1816,  continued  the  double  war  duties 
until  July  1,  but  the  general  tariff  act  was  approved  April  27th,  1816. 
The  tariff  was  not  at  this  time,  or  for  sixteen  years  after,  a  political  ques- 
tion, but  it  is  noteworthy  that  tariffs  were  passed  in  every  presidential 
year  until  1832,  except  in  1820.  All  parties  agreed,  however  reluctantly, 
in  passing  the  increased  duties,  for  fear  of  alienating  the  votes  of  the  pro- 
tected interests.  In  1820  a  tariff  was  proposed,  but  failed,  because  Mr. 
Monroe  was  to  be  re-elected  without  a  contest.  As  yet,  however,  in  1816, 
the  question  was  neither  political  nor  sectional.  New  England  generally 
opposed  the  tariff,  but  not  universally.  The  South  acceded  to  it  for  the 
sake  of  cotton.  This  article  was  then  heavily  taxed  abroad,  and  some 
very  cheap  manufactures  of  it  from  China  and  India  were  largely  imported. 


PROTECTION  IN  THE   UNITED  STATES.  37 

It  was  believed  that  the  development  of  cotton  manufactures  here  was 
the  best  way  to  make  cotton  culture  lucrative.  Lowndes,  of  South  Caro- 
lina, reported  the  bill,  and  Calhoun  made  a  speech  in  favor  of  it.  It  was 
based  on  a  report  by  Dallas,  Secretary  of  the  Treasury,  in  which  he 
divided  the  articles  subject  to  duty  into  three  classes:  (1)  those  of  which 
the  home  supply  was  adequate  to  the  demand ;  (2)  those  of  which  the 
supply  was  partial ;  (3)  those  of  which  the  supply  was  small  or  nothing. 
He  proposed  graduated  duties  on  these  three  classes,  the  highest  duty 
falling  on  the  first  class.  You  observe  at  once  the  incongruity.  On  the 
plan  of  fostering  infant  industries,  duties  would  evidently  be  highest  on 
articles  producible  but  not  produced,  or  only  slightly  produced ;  but  here 
we  find  the  market  closed  when  the  supply  is  adequate,  and  only  a 
revenue  tax  laid  on  those  articles  which  were  least  produced,  and  a 
medium  tax  on  those  which  were  in  the  heat  of  the  struggle.  It  is  the 
best  possible  test  of  a  theory  to  see  whether  it  admits  of  two  contra- 
dictory applications  in  practice,  for  between  theory  and  practice  there  can 
be  no  inconsistency.  If  any  appears,  it  is  proof  positive  that  either  the 
theory  or  the  practice  needs  revision  and  correction.  To  say  that  a  thing 
is  true  in  theory  but  bad  in  practice  is  a  radical  absurdity.  Theory  is  the 
attempt  of  man  to  learn  general  principles  for  guidance  in  his  practical 
tasks.  Practice  is  the  test  of  theory,  and  shows  that  the  general  princi- 
ples have  been  either  correctly  or  incorrectly  apprehended.  When,  there- 
fore, a  theory  admits  of  two  opposite  applications  in  practice,  one  of 
which  fits  it  as  well  as  the  other,  it  proves  conclusively  that  the  theory 
embraces  a  contradiction,  and  we  see  why  protection  of  infant  industries 
never  leads  to  their  independence  and  to  free  trade.  The  advocates  of 
protection  use  the  first  form  of  the  theory  to  secure  its  adoption  and  the 
second  to  secure  its  perpetuation. 

Calhoun's  chief  argument  for  protection  was  the  need  of  the  pro- 
posed manufactures  in  case  of  war.  This  argument  had  considerable 
force  at  the  end  of  a  war  in  which  foreign  supplies  had  been  cut  off,  but, 
on  the  other  hand,  the  exactions  of  the  manufacturers  during  the  war 
led  many  to  resent  any  attemj^t  now  to  favor  them. 

The  argument  for  protection  to  provide  against  the  contingency  of 
war  has  great  popular  weight.  The  policy  and  history  of  the  United 
States  since  1816,  however,  afford  a  striking  commentary  on  it.  We 
have  always  kept  our  army  down  a  little  below  the  point  of  efficiency. 
We  have  grudged  the  education  of  a  few  officers.  We  have  reduced  our 
navy  so  low  that  we  hardly  do  our  share  in  the  police  of  the  ocean.  We 
pay  little  heed  to  our  fortifications.'  "Yet  we  voluntarily  expose  ourselves 
to  a  loss  far  greater  than  the  cost  of  any  armament,  out  of  obedience  to 
this  notion  of  providing  for  a  possible  war  by  industrial  restraints.  Our 
popular  orators  formerly  made  much  capital  by  comparing  our  expendi- 


38  PROTEUTION  IN  THE   UNITED  STATEH. 

tures  for  army,  navy  and  fortifications,  with  those  of  the  old  countries; 
but  they  said  nothing  of  this  industrial  loss  incurred  to  the  same  end. 

Furthermore,  is  it  not  a  satire  on  this  notion  to  remember  that  the 
only  wars  in  which  we  have  been  engaged  since  1816  have  been  that 
•with  Mexico  and  the  civil  war,  in  neither  of  which  our  cherished  indus- 
trial independence  was  of  any  use  to  us  ? 

I  am  not  arguing  for  expenditures  on  armies  and  navies.  Far  from  it. 
We  are  happy  in  not  needing  them.  Any  one  who  has  to  come  three 
thousand  miles  to  fight  us  will  think  well  of  it  first.  I  only  point  out 
the  grotesque  contrast  between  our  preparations  for  war  of  the  one  kind 
and  of  the  other. 

In  fact,  however,  the  independence  which  we  seek  must  be  sought  in 
another  direction.  Independe]it  men  are  those  who  have  wealth,  not 
those  whose  houses  are  stored  for  a  siege.  Independent  nations  are  those 
which  are  wealthy,  because  they  can  command  what  they  want  when  they 
want  it.  Those  will  be  wealthiest  which  give  industry  its  freest  course  in 
time  of  peace. 

The  case  of  the  South  during  the  late  war  is  a  most  striking  proof  of 
the  fallacy  of  the  "  independence"  doctrine.  The  South  had  less  of  this 
artificial  independence  than  any  country  in  the  world.  It  was  blockaded 
and  inclosed  by  an  immensely  superior  force,  and  what  happened  ? 
First,  people  found  that  when  they  had  put  their  last  stake  on  war,  they 
could  do  without  thousands  of  things  which  had  seemed  essential; 
second,  they  found  substitutes  and  makeshifts  to  take  the  place  of  real 
essentials;  third,  they  found  that,  so  long  as  they  had  commodities  to 
exchange  which  the  rest  of  the  world  wanted,  no  power  could  prevent 
the  exchange  from  going  on.  It  does  not  become  those  who  needed  four 
years  to  subdue  the  South  to  argue  that  it  was  weak  for  lack  of  indus- 
trial independence.  Indeed,  the  argument  is  incomplete  in  two  or  three 
important  points.  Suppose  that  the  South  had  not  been  weakened  by 
slavery  ;  suj^pose  that  it  had  been  an  independent  nation  before  and  had 
enjoyed  free  trade,  so  that  its  people  had  possessed  all  the  wealth  they  might 
have  accumulated ;  suppose  that  its  enemy  had  been  obliged  to  seek  it 
over  the  ocean,  and  by  sea  attack  only ;  on  such  a  hypothesis  who  can 
believe  that  the  South  would  have  suffered  because  it  had  not  ''enjoyed 
protection,"  and  who  can  urge  us,  on  the  chances  of  ever  finding  our- 
selves in  the  position  of  the  South,  to  go  on  creating  an  artificial  inde- 
pendence? Our  independence  lies  in  union,  good  government,  and  free 
industry. 

The  tariff  of  1816  was  not  carried  against  the  instincts  of  the  American 
people  towards  freedom  without  strong  opposition.  The  great  majority 
adhered  to  the  old  Jeffersonian  doctrines  and  policy.  They  wanted  to 
get  rid  of  the  army  and  navy,  to  reduce  taxes  and  expenditures,  to  re- 


PROTECTION  IN  THE  UNITED  STATES.  39 

duce  the  number  of  office-holders,  and  to  "  let  things  alone."  The  pre- 
Yailing  argument  was  the  interest  of  the  existing  investments,  which,  of 
course,  no  one  desired  to  destroy.  It  soon  appeared,  however,  that  the 
harrier  of  taxation  was  no  equivalent  for  embargo  and  war. 

The  return  of  peace  in  Europe  allowed  industry  and  finance  to  return 
to  the  operations  of  natural  laws  and  to  escape  from  the  constraints  of 
twenty-five  years  of  war.  The  shock  was  terrible,  and  it  took  ten  years 
for  its  effects  to  subside.  In  1816,  the  English  exported  immense  quan- 
tities of  manufactured  goods  to  the  Continent  and  to  the  United  States. 
The  results  of  these  transactions  were  disastrous.  Our  paper  money  here 
also  exercised  its  influence  to  encourage  overtrading  and  overimportation. 
In  1817,  the  manufacturers  were  in  distress.  Cries  were  heard  against 
the  inundations  of  foreign  goods,  against  the  drain  of  specie  and  against 
the  balance  of  trade.  Evidently  we  cannot  understand  these  things  with- 
out taking  into  account  the  movements  which  were  going  on  in  the  other 
industrial  nations,  but  the  popular  opinion  here  was  that  the  English 
had  set  out,  by  a  sacrifice  of  some  millions  worth  of  goods,  to  destroy 
American  manufactures.  This  belief  had  deep  root  and  perhaps  has 
only  lately  died  out,  since  we  have  ceased  to  hear  cries  of  "  British  gold" 
whenever  any  one  spoke  of  free  trade.  The  notion  I  have  referred  to  re- 
ceived strong  re-enforcement  from  a  remark  of  Brougham's  which  you 
may  find  quoted  in  the  first  popular  protectionist  work  you  choose  to 
take  up,  in  which  he  recommended  his  countrymen  to  reconquer  tha 
American  market.  If  he  meant  to  propose  to  them  to  sacrifice  their  capital 
in  giving  several  millions'  worth  of  goods  to  the  Americans  in  order  to  de- 
stroy factories  which  would  spring  up  again  the  moment  they  tried  to 
reimburse  themselves,  they  would  have  been  the  first  to  laugh  at  him. 

An  eager  effort,  however,  in  favor  of  protection  was  now  commenced, 
and  it  was  kept  up  for  fifteen  years.  Ifc  had  an  organ  in  Niles'  Eegister, 
the  editor  of  which  was  a  fanatical  protectionist.  He  filled  his  paper, 
week  after  week,  with  essays,  items,  statistics,  and  arguments  in  favor  of 
"  home  industry."  No  such  effort  has  ever  been  made  on  the  other  side, 
and  I  believe  that  one  can  understand  tlie  means  by  which  the  natural 
tendency  of  the  American  people  to  freedom,  and  their  early  bias  that 
way,  was  perverted,  only  by  observing  the  zeal  and  industry  with  which 
protectionism  was  inculcated. 

The  tariff  of  181G  had  provided  for  a  gradual  decline  of  the  tax  on 
cotton  and  woolen  goods,  and  Congress  had  refused  to  include,  as  was  de- 
sired, a  prohibition  of  nankeens,  but  the  time  at  which  the  reduction  on 
woolens  and  cottons  was  to  take  place  was  deferred  until  1826,  by  an  Act 
of  April,  20,  1818,  and  the  duty  on  bar  iron  was  raised  from  $9  to  $15 
per  ton. 

The  tariff  of  1816  had  also  adopted  the  principle  of  the  minimum  on 


40  PROTECTION  IN  THE  UNITED  STATES. 

cotton  cloth,  and  cotton  yarn,  none  of  the  former  being  rated  at  less  than 
25  cents  per  square  yard,  whatever  its  cost  at  the  place  of  exportation. 
This,  of  course,  cut  off  the  American  people  from  any  advantage  by  the 
great  factory  system  of  England,  or  from  the  introduction  of  machinery 
in  England,  so  far  as  these  improvements  tended  to  cheapen  cotton  cloth. 
It  ought  to  be  added  that  the  incorrect  valuation  of  the  pound  sterling, 
the  inaccuracy  of  the  weights  and  measures  used  at  this  time,  and  the 
long  credit  given  by  the  government  for  duties,  to  some  extent  neutral- 
ized the  duties. 

In  1820,  Mr.  Baldwin,  of  Pittsburgh,  introduced  three  bills,  one  for 
increased  duties,  one  for  taxes  on  auction  sales,  and  one  for  cash  payment 
of  duties,  which  all  failed  to  pass.  In  1822  and  1823,  other  bills  were  in- 
troduced for  increasing  duties,  which  failed  to  pass.  It  was  not  until  the 
great  presidential  struggle  of  1824  that  another  tariff  crowned  the  seven 
years'  struggle.  Before  taking  that  up  I  desire  to  present  to  you  some  of 
the  chief  doctrines  which  were  believed  and  taught  at  this  time,  as  we 
learn  them  from  the  congressional  debates  and  Niles'  Eegister. 

It  was  argued  that  wages  were  not  higher  here  than  in  England  when 
properly  measured.  This  was  in  answer  to  the  free  trade  argument  as 
then  put,  that  it  was  useless  to  try  to  develop  manufactures  here  because 
of  this  disadvantage.  Of  course,  if  it  is  true  that  wages  are  higher  here, 
that  would  be  the  true  inference. 

It  was  also  agreed,  on  behalf  of  protection,  that  protection  and  revenue 
were  antagonistic  to  each  other,  and  that  the  government  ought  to  be 
supported  by  "  direct "  taxation,  while  duties  on  imports  should  be  re- 
served entirely  for  purposes  of  protection.  Niles  published  long  articles 
in  which  he  urged  this  view  of  the  subject,  and  he  brought  forward  many 
and  strong  considerations  in  favor  of  what  he  called  direct  taxation.  He 
showed  what  the  tariff  really  cost  each  consumer,  he  opposed  a  revenue 
from  import  duties  as  uncertain,  and  all  this  in  favor  of  prohibitory  duties 
for  the  purpose  of  protection. 

Another  feature  of  the  controversy  was  that  the  shipping  interest  was 
blamed  in  no  measured  terms  for  opposing  protection  to  manufactures. 
The  growth  of  shipping  was  pointed  out  and  traced  back  to  the  discrimi- 
nating and  tonnage  duties  of  1789,  and  tlie  shipping  interest  was  charged 
with  selfishness  in  resisting  the  application  of  the  same  means  to  other 
industries.  In  this  connection  we  meet  with  the  best  instance  of  the 
fallacy  which  inheres  in  the  word  "  protection ''  itself.  In  inaking  up 
the  account  against  the  shipping  interest  for  the  protection  which  had 
been  accorded  to  it,  the  war  undertaken  for  its  defence,  but  against  its 
will,  was  charged  Lo  it,  and  also  the  entire  expense  of  the  navy.  The 
navy  "protected"  the  merchant  ships  from  unlawful  attacks  or  inter- 
ference, that  is,  it  gave  them  the  security  wliich  it  is  the  business  of  gov- 


PROTECTION  m  THE   UNITED  STATES.  41 

ernment  to  provide,  and  which  is  analogous  to  the  office  of  courts  and 
police  on  land,  but  this  protection  was  made  a  basis  of  argument,  that  the 
government  ought  to  interfere  likewise  to  "  protect "  producers  against 
industrial  competition. 

A  similar  charge  of  selfishness  was  brought  against  the  cotton  manu- 
facturers of  New  England,  who,  after  1820,  o^Dposed  any  further  protec- 
tion. Their  industry  was  firmly  established  and  very  remunerative,  and 
they  found  that  the  effect  of  protection  was  simply  to  disturb  their  busi- 
ness by  tempting  great  numbers  into  it,  and  by  exposing  it  to  great  fluc- 
tuations. It  was  argued  against  them  that  the  system  ought  to  be  ex- 
tended to  wool  and  iron,  until  they  reached  the  same  point.  This  is 
logical  and  correct,  but,  as  has  often  been  shown,  it  reduces  the  system  to 
an  absurdity.  After  taxing  the  community  to  foster  one  industry,  it  is 
proposed  to  tax  that  one,  with  others,  to  foster  a  second,  then  all  the  pre- 
ceding to  encourage  a  third.  It  follows  that  the  first  and  second  lose 
their  advantage,  and  that  the  result  is  a  series  of  weak  fosterlings  sup- 
ported by  weakened  legitimate  industries. 

The  same  criticism  applies  to  any  system  of  "  incidental  protection." 
The  claim  is  put  in  to  widen  the  system  and  do  "  justice"  by  favoring 
all,  which  is  impossible.     The  only  real  justice  is  to  favor  none. 

The  great  argument  of  this  period,  however,  was  "  hard  times."  There 
was  a  commercial  crisis  in  1819,  which  has  not,  perhaps,  been  equalled 
since.  The  complaints  were  kept  up  for  five  years,  although  the  only 
ground  for  them,  if  any,  was  the  comparison  with  the  flush  times  of  specu- 
lation and  paper  money,  and  they  were  just  such  times  of  distress  as  the 
whole  commercial  world  was  enduring.  The  complaints  ceased  when  the 
tariff  of  1824  was  passed. 

Those  who  argued  most  strenuously  on  this  ground,  found  themselves 
putting  propositions  together  which  made  a  strange  combination  when  com- 
pared. Thus:  (1.)  The  United  States  is  the  richest  country  in  the  world 
in  point  of  natural  resources,  and  has  only  a  sparse  population.  (2.)  This 
favored  country  is  in  great  distress.  (3.)  What  it  needs  is  more  taxation 
to  enable  its  people  to  get  a  living  in  it. 

We  not  unfrequently  find  arguments  used  during  this  period  which 
show  that  the  speakers  or  writers  believed  that  a  girl  in  a  Manchester 
factory,  who,  with  a  loom,  could  produce  as  much  cloth  as  several  men 
could  make  by  hand  in  the  same  time,  was  therefore  able  to  exchange  her 
product  for  the  product  of  the  labor  of  that  number  of  American  farmers. 
Of  course  all  the  notions  about  the  balance  of  trade,  and  draining  specie, 
and  making  money  scarce  are  met  with  continually. 

The  duties  collected  under  the  tariff  of  1816,  during  the  last  three 
years  of  its  operation,  were  equal  to  a  rate  of  30  per  cent,  on  dutiable  im- 


42  PROTECTION  IN  THE   UNITED  STATES. 

ports.     You  see  that  there  had   been  great  progress  since  Hamilton's 
day. 

I  come  no"W  to  the  tariif  of  1824.  That  act  would  not  have  been 
passed  if  it  had  not  been  for  the  political  contest  which  was  impending. 
Here  we  meet  with  the  new  factor  of  political  intrigue,  and  also  with 
those  phenomena  which  arise  from  the  extension  and  complexity  of  the 
system.  This  bill  was  dexterously  combined  to  embrace  strength  enough 
to  carry  it.  "We  also  now  find  the  South  opposed  to  protection ;  as  indeed 
she  had  been  since  1820.  The  arguments  employed  were  not  new,  but 
the  issue  was  clearer  and  the  debate  was  far  better  sustained  from  the 
free  trade  side.  "We  have  an  argument  by  Mr.  "Webster,  in  which  several 
of  the  issues  which  continually  arise  in  this  controversy  are  handled  in 
a  masterly  manner.  He  argued  them  on  a  plane  entirely  above  the 
wretched  patch-work  of  which  the  discussion  otherwise  consisted.  I  have 
already  quoted  his  crushing  criticism  of  the  notion  of  protection  as  an 
"American  system,"  under  the  application  of  that  title  which  now  became 
current.  He  showed  the  advance  of  opinion  on  this  matter  abroad,  and 
showed  that  we  were  taking  on  our  young  shoulders  a  load  which  the 
older  nations  would  be  glad  to  throw  off,  if  they  were  not  clogged  by  so 
many  vested  interests.  He  also  showed  that  the  distress  complained  of, 
so  far  as  it  had  existed  in  the  last  few  years,  had  been  due  to  currency 
troubles  here  and  abroad,  and  gave  a  correct  explanation,  which  few 
seemed  able  to  understand,  of  the  phenomena  of  the  exchanges  here  in 
1820  and  1821.  In  regard  to  the  comparative  rates  of  wages,  he  said'. 
The  chairman  of  the  committee  "says  it  would  cost  the  nation  nothing, 
as  a  nation,  to  make  our  ore  into  iron.  Now,  I  think  it  would  cost  us 
precisely  that  which  we  can  worst  afford;  that  is,  great  labor.  *  *  * 
"We  have  been  asked  *  *  in  a  tone  of  some  pathos,  whether  we  will 
allow  to  the  serfs  of  Kussia  and  Sweden  the  benefit  of  making  our  iron 
for  us.  Let  me  inform  the  gentleman  that  those  same  serfs  do  not  earn 
more  than  seven  cents  a  day,  and  that  they  work  in  these  mines,  for  that 
comjiensation,  because  they  are  serfs.  And,  let  me  ask  the  gentleman 
further,  luhether  we  have  any  labor  in  this  country  that  cannot  be  better 
employed  than  in  a  business  which  does  not  yield  the  laborer  more  than 
seven  cents  a  dayf  *  *  *  The  true  reason  why  it  is  not  our  policy 
to  comjiel  our  citizens  to  manufacture  our  own  iron  is,  that  they  are  far 
6etter  emjoloyed.  It  is  an  unproductive  business,  and  they  are  not  poor 
enough  to  be  obliged  to  follow  it.  If  we  had  more  of  poverty,  more  of 
misery  and  something  of  servitude ;  if  we  had  an  ignorant,  idle,  starving 
population,  we  might  set  up  for  iron  makers  against  the  world.  *  *  * 
The  freight  of  iron  has  been  afforded  from  Sweden  to  the  United  States 
as  low  as  eight  dollars  per  ton.  This  is  not  more  than  the  price  of  fifty 
miles'  land  carriage.     Stockholm,  therefore,  for  the  purpose  of  this  argu- 


PROTECTION  m  THE   UNITED  STATES.  43 

ment,  may  be  considered  as  within  fifty  miles  of  Philadelphia.  Now  it 
is  at  once  a  strong  and  just  view  of  this  case,  to  consider  that  there  are 
within  fifty  miles  of  our  market,  vast  multitudes  of  persons  who  are 
willing  to  labor  in  the  production  of  this  article  for  us  at  the  rate  of 
seven  cents  per  day,  while  we  have  no  labor  which  will  not  command, 
upon  the  average,  at  least  five  or  six  times  that  amount.  The  question  is 
then,  shall  we  buy  this  article  of  these  manufacturers  and  sufl"er  our  own 
labor  to  earn  its  greater  reward,  or  shall  we  employ  our  own  labor  in  a 
similar  manufacture,  and  make  up  to  it,  by  a  tax  on  consumers,  the  loss 
which  it  must  necessarily  sustain." 

Unfortunately,  Mr.  Webster  was  bound  by  local  interests  to  sustain 
the  protection  to  shipping,  and  this  was  fatal  to  his  opposition.  Massa- 
chusetts wanted  protection  on  ships,  but  not  on  hemp  or  iron  or  molasses. 
A  small  Massachusetts  interest  joined  with  Rhode  Island  and  Connecticut 
in  favor  of  an  increased  tax  on  woolens,  but  not  on  wool.  The  tarifl"  of 
1816,  it  was  said,  had  not  sufficiently  j)rotected  woolens,  and  had  made 
the  tax,  such  as  it  was,  diminish  at  intervals.  The  English  bounty  on 
exported  woolens  was  a  damage  which,  it  was  claimed,  ought  to  be  coun- 
teracted. Observe  the  antagonism  here  established  :  England,  pursuing 
the  old  restrictive  system  by  these  bounties,  made  a  present  to  foreign 
nations  at  the  expense  of  her  own  taxpayers.  The  foreign  nations  re- 
garded this  gift  as  an  injury,  and  set  up  barriers  against  its  acceptance, 
at  the  expense  of  their  taxpayers.  Could  anything  more  conclusively 
condemn  the  whole  system  ? 

Then  look  at  the  internal  conflict  of  interest.  Kentucky  wanted  a 
tax  on  hemp  to  encourage  her  production,  although  her  dew-rotted  hemp 
was  so  inferior  to  the  Russian  water-rotted  hemp  that  it  never  competed. 
She  also  wanted  a  tax  on  molasses  to  make  rum  dear  in  the  interest  of 
whiskey.  Lousiana  wanted  a  tax  on  molasses  for  protection  to  her  suo-ar 
planters.  The  Middle  States  and  Ohio  wanted  protection  on  raw  wool ; 
and  Pennsylvania,  of  course,  wanted  protection  on  iron.  In  the  conflict 
of  interests  New  England  was  defeated,  having  less  political  power,  and 
hemp,  whiskey,  iron,  and  raw  wool,  uniting  the  Middle  and  Western 
States,  carried  the  day.  The  minimum  on  cottons  was  raised  to  30  cts. 
A  minimum  for  woolens  was  established  at  33|  cts.,  and  the  duty  Avas 
put  at  30  per  cent.,  to  be  advanced  to  33^  per  cent,  in  a  year.  Raw  wool, 
costing  less  than  10  cts.  per  lb.,  was  to  pay  15  per  cent.  Other  wool  was 
to  pay  20  per  cent,  for  a  year,  25  per  cent,  the  second  year,  and  30  per 
cent,  afterwards.  Bar  iron  was  raised  to  $18  per  ton  if  forged,  and  stood 
at  $30  if  rolled.  This  was  to  ofi"-set  the  cheapness  of  the  new  process 
chiefly  used  in  England. 

This  tariflf  passed  the  House  by  107  to  102.  New  England  gave  15 
votes  for  it,  and  23  against  it.     Tli'^  Southern  and  Southwestern  States 


44  PROTECTION  IN  THE  UNITED  STATES. 

gave  two  votes  for  it.     The  duties  collected  under  it  were,  on  an  average, 
equal  to  a  rate  of  37  per  cent. 

One  expects  now,  in  reading  the  contemporaneous  records,  to  be  rid 
of  the  subject  for  a  time.  The  reader  naturally  says :  "  The  tariff  has 
been  raised ;  the  protection  has  been  granted.  The  question  is  disposed 
of."  Nothing  of  this  kind,  however,  took  place.  The  high-tariff  in- 
terest was  by  no  means  satisfied  with  the  result,  especially  as  regarded 
woolens.  The  agitation  recommenced  the  next  year,  with  a  reiteration 
of  the  old  arguments,  condemnation  of  "  our  present  ruinous  system," 
and  demand  for  protection,  as  if  there  had  been  no  concessions  in  that 
direction.  This  calls  our  attention  to  certain  features  inherent  in  the 
protective  system,  and  shows  us  how  erroneous  in  practice,  as  well  as  in 
theory,  is  the  notion  that  we  can  proceed  through  protection  to  free  trade. 
Protection  nourishes  dependence,  not  independence.  It  is  a  system  in 
which  all  the  parts  hang  together,  and  protection  for  some  cannot  be 
united  with  freedom  for  others.  If  one  industry  should  be  set  out 
in  free  competition,  while  the  rest  were  protected,  it  would  be  found 
that  they  are  interdependent ;  that  machinery,  raw  materials  and  labor 
supplies  would  be  so  dear  that  the  exposed  industry  would  have  no 
fair  chance  in  competition  with  foreigners.  Hence  one  long  protected 
industry,  if  it  became  independent  by  natural  causes,  could  not  be  left 
free  unless  the  whole  system  were  abandoned.  But  then  the  cry  goes  up 
from  those  nurslings  of  recent  beginning,  that  they  are  not  yet  ready. 
If  you  defer  the  introduction  of  freedom  for  ten  years  longer  on  their 
account,  a  new  company  of  infants  is  meantime  brought  into  being,  and 
the  plea  for  further  delay  comes  from  them.  Thus  you  go  on  forever, 
and  the  theory  is  reduced  to  an  absurdity. 

During  the  period  from  1824  to  1828  the  political  factor  in  the  tariff 
controversy  rose  to  chief  importance.  The  administration  of  J.  Q.  Adams 
was  exposed  to  the  most  vigorous  and  relentless  opposition  from  the 
party  which  had  formed  around  Andrew  Jackson.  After  the  Democratic 
convention  of  Harrisburg  in  1824  it  was  certain  that  Pennsylvania  was 
enthusiastic  for  Jackson.  The  rural  population  of  that  State  cared  more 
for  Jackson  than  for  tariff.  This  was  a  fact  which  the  politicians  had 
simply  to  accept  as  a  fact.  The  composition  of  the  Jackson  party,  there- 
fore, coincided  to  a  certain  extent  with  the  coalition  which  had  passed 
the  tariff  of  1824.  New  England  as  the  Adams  section  was,  both  politic- 
ally and  on  the  tariff,  still  more  in  a  position  to  be  neglected  than  it  was 
in  1847.  The  South  found  its  political  combinations  and  its  tariff  inter- 
ests inconsistent. 

England  still  furnished  a  convenient  and  popular  object  of  attack. 
She  now  showed  her  perfidy  and  desire  to  ruin  American  manufactures  by 
reducing  her  own  duties  on  raw  wool  to  one  penny  per  lb.     This  enabled 


PROTECTION  IN  THE  UNITED  STATES.  45 

her  manufacturers  to  manufacture  so  cheaply  as  to  pay  our  import  duties 
and  yet  compete  with  success.  According  to  the  tlieory  which  we  are 
studying,  this  was  a  serious  reason  for  "protecting"  ourselves  against  the 
good  this  might  have  brought  to  us.  The  woolen  manufacturers  of  Bos- 
ton accordingly  sent  a  petition  to  Congress  in  1826  asking  for  more  pro- 
tection. Jan.  10th,  1827,  a  bill  was  introduced  for  raising  the  duties 
on  wool  and  woolens.  It  was  tabled  in  the  Senate  by  the  casting  vote  of 
Calhoun.  It  was  in  the  New  England  interest,  and,  as  Niles  said,  politics 
were  in  the  way. 

In  July,  1827,  a  national  convention  met  at  Harrisburg,  called  by  the 
Pennsylvania  Society  for  the  Promotion  of  Manufactures  and  Mechanic 
.  Acts  to  consider  measures  for  promoting  manufactures.  It  was  the  most 
energetic  attempt  ever  made  to  organize  and  give  symmetry  to  the  protec- 
tionist movement.  It  adopted  resolutions  in  favor  of  more  protection  for 
iron,  steel,  glass,  wool,  woolens  and  hemp.  It  proposed  a  duty  of  20  cents 
a  pound  on  wool  costing  8  cents  or  more,  to  advance  2^  cents  per  annum 
until  it  should  be  50  cents.  It  adopted  four  minima  for  woolens,  50 
cents,  $2.50,  $4.00,  $6.00.  The  duty  was  to  be  40  per  cent,  for  a  year,  45 
per  cent,  the  next  year,  and  50  per  cent,  afterwards. 

The  committee  on  manufactures  at  the  next  session  of  Congress  recom- 
mended that  evidence  should  be  taken  as  to  the  state  of  manufactures. 
This  was  a  new  departure,  for  hitherto  all  tariff  legislation  had  been  made 
blindly  and  ignorantly.  The  Northern  protectionists  opposed  the  propo- 
sition ;  the  South  favored  and  carried  it.  The  evidence  all  went  to  show 
deplorable  distress  in  all  manufacturing  industry,  although  the  country 
generally  was  enjoying  great  prosperity.  The  argument  necessarily  was 
tangled  and  contradictory.  It  was  urged,  and  really  was  the  greatest 
popular  argument,  that  the  country  owed  its  prosperity  to  the  tariff,  but 
here  were  the  manufacturers  claiming  to  be  in  distress.  The  truth  was 
that  the  country  possessed  such  means  of  producing  wealth  that  the  tariff 
could  not  crush  them.  Then  again  the  distress  was  needed  as  an  argu- 
ment for  more  protection,  but  what  light  did  it  throw  back  on  the  pre- 
vious attempts  in  that  direction  ? 

Many  of  the  peculiar  doctrines  I  have  mentioned  as  advocated  at  an 
earlier  period  were  now  heard  no  longer,  but  a  new  one  was   brought ' 
forward  and  repeated  again  and  again,  viz.,  that  protection,  by  domestic 
competition,  lowers  prices.    I  have   already,  in  my  former  lecture,  dis- 
cussed this  doctrine. 

The  new  tariff  bill  was  introduced  in  February,  1828.  It  was  based 
upon  the  recommendations  of  the  Harrisburg  convention.  Its  central 
feature  was  wool  and  woolens.  Hemp,  iron  and  molasses  figured  as  be- 
fore. It  came  forward,  therefore,  as  a  New  England  or  Adams  measure, 
and  the  Jackson  coalition  opposed  it,  but  under  the  necessity  of  satisfy- 


46  PROTECTION^  IN  THE   UNITED  STATES. 

ing  the  Middle  and  Western  States.  The  feeling  in  the  South  was  al- 
ready very  bitter  about  the  tariff  legislation,  and  this  new  effort  to  push 
on  the  system,  reckless  of  Southern  protests,  still  further  embittered  the 
South.  The  West  also  took  the  position  that  they  had  as  yet  had  noth- 
ing of  this  good,  which  it  was  assumed  that  the  Government  had  to  dis- 
tribute, and  they  demanded  that,  if  the  system  was  to  go  on,  they  should 
have  their  share.  Mr.  Webster  took  the  position  for  Massachusetts,  that 
she  had  been  forced  into  manufactures  by  the  policy  adopted  in  1824,  in 
spite  of  her  protests,  and  she  now  protested  that  the  investments  into  which 
she  had  been  drawn  should  not  be  sacrificed. 

You  look  in  vain  through  the  discussion  of  this  bill  for  any  broad 
principles.      Much  was  said  indeed  about  a  national   policy,  but  it  all 
referred  to  this  system  which,  at  the  first  approach  to  actual  discussion, 
resolved  itself  into  political  intrigue,  a  strife  of  sections,  and  a  struggle 
between  *'  interests."     Much  was  said  about  broad  principles,  but  all  refer- 
red to  the  notion  that  by  robbing  all  for  the  benefit  of  the  few  it  was  pos- 
sible in  some  way,  which  never  was  explained,  to  gain  great  benefit  to  all. 
The  South  adopted  the  policy  of  trying  to  make  the  bill  as  bad  as  possi- 
ble.    They  proposed  and  advocated  absurd  and  extravagant  exaggerations, 
in  the  hojae,  apparently,  that  they  could  thus  make  apparent  to  the  pro- 
tectionists the  enormity  of  their  proj)ositions  and  the  absurdity  of  their 
demands.     This  policy  did  not  work.     The  belief  in  the  great  protection- 
ist dogmas  had  now  become  strong.     Political  exigencies  were  great,  and 
the  Northern  protectionistseither  rejected  the  exaggerated  propositions,  or 
accepted  them  in  good  faith.     This  tariif  came  to  be  known  as  the  "  tariff 
of  abominations,"  but  its  worst  abominations  were  forced  into  it  by  the 
perverse  policy  of  the  Southern   men.     What  it  concerns  us  to  observe 
is,  the  evil  effects  of  mixing  up  jDolitics  and  president-making  with  fiscal 
legislation,  and  the  exaggerations  to  which  the  protective  system  leads. 

The  result  of  this  struggle  was  that  the  tax  on  molasses  was  raised  to 
10  cents  per  gallon.  The  tax  on  wool  was  put  at  4  cents  per  pound  and 
40  per  cent.,  to  increase  by  5  per  cent,  annually  until  it  was  50  per  cent. 
A  $1.00  minimum  was  inserted  in  the  scheme  proposed  at  Harrisburgh, 
and  a  tax  of  40  cents  a  square  yard  was  laid.  This  combination 
of  taxes,  resulting  from  political  motives  only,  to  favor  the  avooI 
growers  of  the  Middle  and  Ohio  States  and  not  to  make  woolens  dear  to 
consumers  in  the  same  districts  and  in  the  South,  was  exceedingly  in- 
jurious to  woolen  manufacturers.  You  observe  that  it  is  not  inhuman 
ingenuity  to  interpose  in  the  delicate  relations  of  trade  by  arbitrary  enact- 
ments without  doing  damage.  On  account  of  these  features  of  the  tariff 
in  regard  to  molasses  and  woolens  it  got  only  IG  votes  from  New  Eng- 
land (in  the  House)  to  23  against  it. 

The  tax  on  bar  iron,  not  rolled,  was  raised  to  $23.40  per  ton ;  if  rolled. 


PROTECTION  IN  THE  UNITED  STATES.  47 

$37  per  ton.  Hemp  was  raised  to  $45  per  ton.  These  features,  •with,  the 
tax  on  "Wool,  gained  the  force  which  carried  the  bill  in  the  house,  105  to  94. 
On  the  final  vote,  there  were  in  the  affirmative  Gl  Adams  and  44  Jackson 
votes ;  in  the  negative,  35  Adams  and  59  Jackson  votes.  The  South, 
after  putting  the  ''abominations"  in  the  bill,  voted  against  it,  except 
three  votes.  To  show  the  want  of  good  faith,  it  is  significant  to 
notice  that,  on  the  motion  for  the  previous  question,  11  Adams  and  99 
Jackson  men  voted  in  the  affirmative,  and  80  Adams  and  11  Jackson 
men  in  the  negative. 

All  the  New  England  men,  and  all  the  bona  fide  tariff  men  like  Niles 
were  disatisfied  with  this  bill,  and  began  at  once  to  agitate  for  its  amend- 
ment. It  has  been  customary  for  the  tariff  advocates  to  speak  of  it  as  a 
good  bill,  which  only  needed  some  slight  "adjustments."  We  see,  I 
think,  if  we  look  at  it  candidly,  the  very  best  proof  that  such  adjust- 
ments are  required  forever,  that  is,  that  they  are  impossible.  It  is  a 
specimen  of  the  purest  quackery  in  legislation.  I  think  it  shows  also 
that  the  only  petition  any  sober  business  man  can  ever  address  to  the 
Legislature  is  to  "^let  him  alone"  and,  if  possible,  not  legislate  about  his 
affairs  at  all.  In  this  very  debate  of  1828,  Mr.  Stevenson,  of  Penn- 
sylvania, arguing  for  the  tariff,  said  :  "If  legislation  were  as  intelligent  as 
commerce  is  vigilant,  much  national  evil  might  be  avoided. "  I  could 
only  improve  this  by  saying :  "  If  it  were  perceived  that  legislation  never 
can  be  as  intelligent  as  commerce  is  vigilant,  far  more  national  evil  would 
be  avoided." 

The  agitation  of  the  Northern  protectionists,  for  the  amendment  of 
the  tariff,  sank  into  insignificance  in  comparison  with  the  discontent 
which  the  tariff  caused  in  the  South.  The  South  was,  of  course,  crippled 
by  slavery,  but  it  is  undeniable  that  the  complaint  the  Southerners 
made  was  just  and  well  founded.  They  sold  in  a  free  market  and  bought 
in  a  protected  one.  They  claimed  that  they  had  inherited  the  grievances 
of  the  colonies  at  the  revolution,  and  that  they  stood  just  where  the 
colonists  had  stood  at  that  time ;  asking  why  they  should  maintain  a 
political  connection  in  which  the  taxing  power  was  abused  for  their  op- 
pression. When  they  were  told  that  they  must  yield  to  the  welfare  of  the 
whole,  they  replied  that  this  was  England's  old  argument  that  the 
colonies  should  bow  to  imperial  considerations.  Thus  the  tariff  con- 
troversy, pushed  to  extremes  by  the  power  of  the  majority,  and  in  dis- 
regard of  the  pleas  of  the  minority  for  justice,  assailed  our  political  system 
in  its  most  delicate  and  most  vital  part — the  integrity  of  the  confedera- 
tion. The  attempt  of  South  Carolina  to  nullify  the  tariff  act  was  not  open 
disunion  and  secession.  It  was  worse.  It  was  an  attempt  to  remain  in 
the  Union  and  yet  reduce  the  confederation  to  imbecility  and  contempt. 
Thus  forty  years  after  the  first  tariff  with  its  8  per  cent,  import  on  duti- 


48  PBOTEQTION  IN  THE  UNITED  STATES-. 

able,  "we  find  that  the  system  had  steadily  advanced,  that  the  infant  in- 
dustries were  as  feeble  and  clamorous  as  ever,  that  the  burden  had  been 
increased  until  it  was  now  equal  to  41  per  cent.,  that  it  had  been  elabor- 
ated into  a  system  in  which  the  lobby  had  been  trained  and  educated, 
that  it  had  corrupted  politics  and  furnished  capital  for  political  schemes, 
that  it  had,  on  the  testimony  of  those  interested,  done  them  no  good,  and 
that  it  had  brought  the  confederation  face  to  face  with  its  greatest  dan- 
ger, that  of  disruption. 


LEOTTJEB  V. 


Vacillatioij"  op  the  Protectioit  Policy  iit  this  Country. — 

couclfsiois". 

At  the  point  which  I  have  now  reached,  in  my  review  of  the  history 
of  protection  in  the  United  States,  it  is  necessary  to  observe  that  the 
original  prejudice  of  the  Americans  in  favor  of  liberty  of  every  kind  had 
been  crushed  out  as  regards  trade.  The  frequent  changes  of  the  tariff  had 
educated  the  generation  which  had  grown  up  since  the  second  war  to  the 
dogmas  and  fallacies  of  protection.  These  had  been  preached  assiduously 
by  Niles  and  Carey,  and  being  plausible  and  popular,  and  falling  in  with 
national  prejudices,  they  had  gained  great  currency.  There  had,  indeed, 
been  no  argument  for  the  other  side.  We  are  familiar  with  the  fact  that 
a  special  interest  finds  ardent  advocates  and  energetic  workers,  while  the 
public  interest  lacks  defenders. 

In  1829,  Condy  Raguet  commenced  the  publication  of  the  Free  Trade 
Advocate,  in  which  he  published  some  of  the  best  writing  on  financial  and 
economic  topics  ever  produced  on  this  side  the  water.  He  wrote  above 
his  readers,  for  whose  minds  Niles'  style  and  arguments  were  much  better 
adapted,  and  his  journal  soon  expired.  He  continued  his  work  in  another 
journal,  called  the  Banner  of  the  Constitution,  for  some  time  longer. 

Another  fact,  which  it  is  important  to  observe  for  a  correct  under- 
standing of  the  movement  in  this  country  towards  protectionism,  is  the 
great  prosperity  which  was  enjoyed  here  from  the  second  war  until  1837. 
The  advantages  of  the  new  country  were,  of  course,  enormous,  and  every 
improvement  in  transportation  and  every  new  invention  tended  to  bring 
them  within  reach.  The  losses  inflicted  by  a  bad  tariff  belonged  in  the 
great  margin  of  what  might  have  been.  The  people  had  not  lost  some- 
thing which  they  once  liad.  They  had  fallen  short  of  something  which 
they  might  have  possessed  for  the  labor  they  had  expended.  This  is 
something  which  people  are  slow  to  understand.  Eob  them  of  a  good 
which  they  liave  possessed,  or  diminish  comforts  to  which  they  have  been 
accustomed,  and  they  feel  it.  They  are  slower  to  understand  that  a  given 
amount  of  labor  might  have  produced,  under  a  given  condition  of  society, 
a  certain  result,  and  that  they  have  fallen  short  of  it.  Such,  however,  is 
the  correct  statement  of  the  effect  of  any  tariff  system,  and  the  American 
people  have  always  been  slow  to  understand  it,  because  they  have  enjoyed 
so  much,  and  have  been  growing  in  comfort  so  steadily,  that  they  could 
almost  afford  to  be  indifferent  to  somethino^  still  better. 


50  PROTECTION  IN  THE   UNITED  STATES. 

In  1830,  this  prosperity  was  pointed  to  in  yiudication  of  the  tariff 
system,  and  with  great  popular  effect.  The  fact  was  that  the  cn-cum- 
stances  were  so  favorable  that  legislation  could  only  lessen,  not  cripple, 
the  advantages,  but  it  was  said  that  the  tariff  had  caused  all  the  prosperity, 
and  hence  the  argument  was:  Let  us  have  more.  In  the  session  of 
1830-31  some  efforts  were  made  to  strengthen  the  tariff  of  1828.  For 
instance,  it  was  proposed  to  repeal  the  provision  that  the  tax  on  salt 
should  be  reduced  from  10  to  5  cents,  January  1,  1832,  and  to  raise  it  to 
15  cents. 

In  the  fall  of  1831,  two  national  conventions,  one  of  protectionists 
and  one  of  free  traders,  were  held.  The  free  traders  met  at  Philadelphia, 
September  30,  and  published  a  clear  and  sound  address,  setting  forth  the 
simple  principles,  which  are  all  mere  truisms,  and  must  rely  on  common 
sense  for  their  effect.  The  effect  seems  to  have  been  very  slight.  The 
Tariff  convention  met  at  New  York,  Oct.  26.  It  published  an  address, 
and  appointed  committees  to  collect  and  publish  "  reports  "  on  various  in- 
dustries. The  address  consisted  of  bad  political  economy  and  the  usual 
special  pleas  to  bar  the  common  sense  application  of  simple  principles. 
As  a  specimen,  I  quote  a  single  sentence  :  "  Nations  are  adversary  to  each 
other.  Their  commercial  intercourse  is  regulated  by  treaties  always  made 
with  a  view  to  relative  advantages,  and  to  provide  for  those  hostilities 
which  are  of  perpetual  occurrence."  The  "reports"  offered  jumbled 
and  immaterial  statistics  about  amounts  produced  and  amounts  imported, 
and  had  their  corner-stone  in  one  on  "  the  balance  of  trade"  view  of  the 
currency.  They  all  talk  of  the  calamity  of  buying  without  selling,  an 
operation  which  we  are  accustomed  to  call,  in  the  rare  cases  when  we  ex- 
perience it,  receiving  presents,  and  they  go  into  hysterics  about  the  dam- 
age endured  from  foreigners  who  send  their  surplus  stocks  here  and  sacri- 
fice them  at  auction,  which  is  only  declaiming  against  cheapness. 

In  the  session  of  1831-2,  a  presidential  election  approaching,  the 
whole  subject  came  up  again.  The  Committee  on  AVays  and  Means  pre- 
sented a  majority  and  minority  report,  with  bills.  The  Committee  on 
Manufactures  proposed  a  high  tariff  revision.  The  Secretary  of  the 
Treasury  reported  a  more  moderate  bill.  The  Senate  also  had  a  bill. 
There  were  also  numerous  amendments.  The  result  was  a  remodeled 
tariff  adjusted  to  suit  the  protective  policy,  signed  July  14,  1832. 

This,  then,  was  the  answer  to  Southern  protests.  The  Southern 
position  was  doubly  unfortunate.  In  the  first  place,  they  insisted  on  the 
unconstitutionality  of  the  tariff,  and  sought  nullification  as  a  remedy. 
This  complicated  their  position  with  the  most  difficult  and  vital  constitu- 
tional questions.  In  the  second  place,  they  did  not  fight  intelligently  for 
free  trade,  nor  yet  for  a  revenue  tariff.  They  wanted  a  "  horizontal  tariff," 
and  (id  valonuii  duties.     South  Carolina  called  a  convention  in  Novem- 


PROTEUTION  IN  THE    UNITED  STATES.  51 

ber,  1832,  and  persisted  in  movements  towards  nullifying  the  tariff.  The 
President  met  them  with  a  proclamation  setting  forth  his  duty  and  inten- 
tions. Congress  met  again  in  that  year  with  the  question  of  tariff  in  the 
first  place  of  interest.  A  bill  introduced  by  Mr.  Yerplanck  was  intended 
to  conciliate.  Many  and  serious  amendments  altering  its  character  were 
introduced,  and  the  whole  winter  was  spent  in  struggles  over  them.  Sud- 
denly, near  the  end  of  the  session,  Mr.  Clay  proposed  another  bill  to 
supersede  them  all.  Mr.  Calhoun  had  quarreled  with  the  President, 
and  had  been  thrown  into  opposition,  and  he  and  Mr.  Clay  arranged  the 
compromise  under  circumstances  which  are  differently  stated  by  different 
authorities.  The  day  Ijefore  that  on  which  the  Act  of  July  was  to  go  into 
operation,  March  2,  1833,  this  compromise  tariff  was  signed  by  the  Presi- 
dent. It  provided  that  the  taxes  fixed  by  the  tariff  of  1832,  so  fiir  as  the 
ad  valorem  rates  exceeded  twenty  j)er  cent.,  should  be  reduced  by  one- 
tenth  of  the  excess  over  twenty  per  cent,  on  the  first  of  January  in  each 
alternate  year  until  1841.  In  that  year  they  were  to  be  .reduced  one-half 
of  the  remaining  excess,  and  in  1842,  were  to  be  reduced  to  twenty  per 
cent.  This  would  issue,  of  course,  in  a  horizontal  tariff  at  that  rate.  This 
bill  also  shortened  the  period  of  credits  on  imports,  and  raised  the  cus- 
tom house  valuation  of  the  sovereign  to  $4.80.  The  reduction  operated 
only  slowly.  It  started  from  the  stringent  high  tariff  of  1832,  and  the 
"  horizontal"  tariff  had  no  principle  of  protection,  or  free  trade,  or  revenue 
in  it.  The  compromise  was  a  pure  political  makeshift,  in  which  the 
public  and  private  interests  had  no  consideration. 

Now,  one  looks  with  great  interest  through  the  history  of  the  subse- 
quent years  to  see  if  manufactures  died  out.  One  expects  lugubrious 
descriptions  of  disasters  from  the  protectionist  journals.  Nothing  of  this 
kind,  however,  is  to  be  found.  Niles  drops  his  long  essays.  The  subject 
disappears  from  his  columns.  No  disasters  take  place.  The  woes  of  the 
woollen  men  are  forgotten.  The  simple  fact  is  that  when  Congress  had 
put  the  question  aside,  the  manufacturers  ceased  to  carry  on  their  business 
in  the  lobby,  but  attended  to  it  at  home.  They  probably  found  this  more 
profitable.  At  any  rate  they  prospered,  and  the  whole  country  prospered 
steadily  until  the  currency  errors  came  in  once  more  to  produce  disaster. 

The  panic  of  1837,  and  the  bank  crash  of  1839,  spread  ruin  through- 
out the  country.  This  is  not  the  place  to  speak  of  the  causes  or  relations 
of  this  disaster.  Suffice  it  to  say,  that  great  amoimts  of  caj^ital  had  been 
invested  here  by  Europeans  during  the  last  decade,  and  that  a  vast  indebt- 
edness had  been  incurred  on  a  bank  inflation.  The  capital  had  been  largely 
invested  in  internal  improvements  carried  on  by  a  kind  of  mania.  These 
works  were  often  unwisely  undertaken  and  extravagantly  conducted. 
They  offered  no  promise  of  profit.  Correctly  regarded,  however,  this 
disaster  was  the  result  of  rash  and  ignorant  abuse  of  exuberant  natural 


52  PROTECTION  IN  THE   UNITED  STATES. 

advantages,  but  the  abuse  had  been  so  excessive  that  the  revulsion  was 
terrible,  and  the  country  did  not  recover  for  five  years. 

I  take  no  account  here  of  the  various  attempts  which  were  made 
during  the  period  of  the  compromise  to  alter  the  duties,  either  directly 
or  under  the  form  of  bills  to  secure  the  collection  of  the  revenue.  It  is 
sufficient  to  say  that  there  were  several  such  attempts,  and  that  the  com- 
promise did  not  run  its  course  without  signs  of  the  old  longing  to  legis- 
late on  this  subject.  The  last  years  of  the  period,  when  the  duties 
were  lowest,  fell  in  with  the  distress  of  1837  to  1842.  The  old  argument 
of  "  hard  times,"  therefore  came  up  with  renewed  force  in  favor  of  more 
protection.  People  did  not  see  that  when  a  country  like  this,  enjoying 
the  greatest  natural  advantages,  suffers  distress,  it  is  proof  positive  that 
artificial  and  legislative  arrangements  must  have  interfered  injuriously 
with  the  play  of  natural  laws.  I  cannot  too  strenuously  insist  upon  this, 
in  view  of  present  circumstances.  The  soil  of  the  earth  furnishes  the 
necessaries  and  comforts  of  life  when  man  applies  labor  and  capital  to  get 
tliem  out  of  it.  If  one  man  has  much  land  at  his  disposal,  he  can  get 
abundance  with  little  labor.  He  pays  all  the  persons  engaged  in  manu- 
factures, trade,  transportation  and  personal  services  out  of  his  abundance, 
for  saving  him  from  loss,  or  doing  part  of  his  work  for  him,  or  contribut- 
ing to  his  comfort  and  advantage.  This  is  a  simple  statement  of  the  eco- 
nomic organization  of  modern  society.  It  regulates  itself  perfectly.  The 
natural  laws,  the  law  of  value,  the  law  of  exchange,  the  principle  of  free 
contract,  are  sufficient  to  keep  the  whole  system  in  harmonious  operation. 
If  the  resources  of  the  soil  are  inadequate  to  the  demands,  either  because 
population  is  excessive  or  the  soil  poor,  the  way  of  escape  is  by  emigration 
or  an  improvement  in  the  arts ;  but  if  the  soil  is  rich,  and  the  population 
meager,  and  yet  there  is  distress,  the  place  to  look  for  the  causes  is  in  the 
artificial  arrangements  of  man.  We  must  have  misapprehended  the  laws 
of  nature  which  govern  economic  circumstances,  and  put  our  legislative 
enactments  out  of  joint  with  them.  The  way  out  of  trouble  lies  in  a 
closer  study  of  the  science  of  economy,  and  a  more  correct  adjustment  of 
our  arrangements  to  the  laws  which  it  teaches.  The  general  custom  of 
man  is,  however,  to  try  to  correct  one  bad  arrangement  by  another,  to 
put  another  cog,  or  another  lever,  or  another  sjn-ing,  into  the  machine, 
never  remembering  that  he  thus  simply  increases  the  friction,  and  lessens 
the  force  which  he  had  before.  It  has  long  been  generally  known  that 
we  cannot  invent  a  perpetual  motion,  because  it  is  making  something 
out  of  nothing,  but  in  social  and  economic  arrangements,  analogous  eflforts 
are  still  continually  made.  So  it  was  in  1842.  Distress  prevailing,  it  was 
supposed  to  be  the  business  of  government  to  remove  distress.  What  else, 
it  Avas  asked,  did  government  exist  for  ?  It  was  a  paternal,  fostering  in- 
stitution.    To  be  sure,  the  persons  who  composed  it  as  individuals,  en- 


PROTECTION  IN  THE   UNITED  STATES.  53 

joyed,  with  a  few  exceptions,  but  little  respect.  The  functions  whicli 
legitimately  belonged  to  government  were  notoriously  ill-performed.  It 
did  worse,  and  at  far  greater  expense,  whatever  it  tried  to  do,  than  any 
person  or  corporation  in  the  country.  If  it  possessed  any  occult  force,  or 
any  superior  intelligence,  or  any  improved  machinery  for  getting  what 
men  want  in  this  world,  it  certainly  kept  it  secret  and  produced  no 
proofs  of  it.  Yet  the  superstition  of  government,  then  and  still  strong 
amongst  us,  led  people  to  look  to  government  to  do  for  them  what  they 
could  only  do  for  themselves  by  industr}'  and  economy. 

The  whigs  entertained  the  general  conception  that  government  de- 
meaned itself  when  it  narrowed  its  own  functions.  They  believed  in  the 
paternal  theory.  They  scorned  all  the  notions  which  had  prevailed  in 
the  government  for  twelve  years,  and,  having  won  a  victory  in  1840,  they 
were  eager  to  put  their  own  theory  in  practice.  They  passed  a  bill  for 
distributing  the  proceeds  of  the  public  lands  amongst  the  States,  thus 
stripping  the  government  of  a  legitimate  source  of  revenue;  but  it  was 
provided  that  this  distribution  should  not  take  pJace  when  duties  were 
above  twenty  per  cent.  At  the  next  session  (1842)  they  passed  a  pro- 
visional tariff  with  a  clause  repealing  the  limitation  on  distribution,  but 
it  was  vetoed  by  Mr.  Tyler.  They  then  passed  a  permanent  tariff,  which 
he  also  vetoed;  both  on  account  of  the  repeal  of  the  limitation  on  distri- 
bution. They  ther^  passed  the  tariff  of  August  30th,  1842,  raising  duties 
and  cutting  off  distribution.  This  act  turned  back  to  protection.  It 
was  based  on  the  tariff  of  1832,  but  the  duties  were  lower.  The  reviving 
industries  of  the  country,  consequent  on  the  destruction  of  the  bad  cur- 
rency, and  the  restoration  of  sound  values,  were  pointed  at  as  proofs  of 
the  success  of  this  policy. 

The  arguments  employed  at  this  period  offer  nothing  new.  The 
notion,  so  prevalent  in  1832,  that  high  tariffs  lower  prices,  and  which  was 
then  afiirmed  as  a  broad  and  general  truth,  was  little  heard  in  1842. 
The  grounds  put  forward  at  the  latter  date  were  the  old  and  Avorn  out 
fallacies  about  imports  and  exports,  balance  of  trad«,  drain  of  specie,  &c., 
&c.  A  specimen  from  the  report  of  the  Committee  on  Manufactures 
may  suffice  :  "  There  are  several  causes  for  the  present  depression  of  prop- 
erty and  general  stagnation  of  business,  one  of  which  will  be  admitted 
to  be  the  large  amount  of  our  importations  over  the  amount  of  exports. 
This  depresses  our  home  industry  and  draws  from  the  country  annually 
large  balances  in  specie,  crippling  our  banks  and  depriving  them  of  the 
power  to  grant  necessary  facilities."  A  great  part  of  the  public  docu- 
ments of  the  United  States  consist  in  a  reiteration  and  expansion  of  this 
paragraph,  every  clause  of  which  contains  errors  which  are  refuted  in  any 
standard  elementary  text  book  on  political  economy.  The  importations 
cannot  exceed  the  exportations  over  any  period  of  time.     If  they  do  for  a 


^ 


54  PROTECTION  IN  THE   UNITED  STATES. 

time,  it  is  proof  that  they  ought  to,  and  it  cannot  produce  any  stagnation 
in  business.  If  imported  articles  drive  home  mannfactiires  out  of  the  mar- 
ket, it  only  proves  that  the  pcojile  are  getting  their  supplies  cheaper,  and 
that  that  particular  form  of  home  industry  is  falling  behind  in  the  indus- 
trial race.  We  have  only  the  alternative  of  letting  the  persons  interested 
do  as  we  all  have  to  do,  emjoloy  energy  and  skill  to  sustain  themselves,  or 
else  rob  ourselves  to  protect  them  in  inferiority — that  is  to  subsidize 
negligence,  inefficiency  and  want  of  skill.  The  importations  cannot 
"draw  away  specie"  unless  we  part  with  it  willingly;  and  if  we  do,  we 
give  up  what  is  worth  less  for  what  is  worth  more.  "We  cannot  be  robbed 
of  specie  except  by  an  invading  army,  and  if  we  give  it  up  in  trade,  |ve 
give  it  up  for  a  profit.  No  sound  bank,  which  has  not  by  its  excessive 
issues  injured  commerce  and  industry,  can  be  "crippled  "  by  an  export  of 
specie,  and  such  an  export  is  the  proper  protection  of  the  public  against 
the  injury  which  excessive  bank  issues  are  doing.  As  for  lessening  the 
power  of  the  banks  to  "grant  necessary  facilities,"  the  committee  are  un- 
der that  notion  of  banks  which  regards  them  as  beneficent  institutions 
whose  function  is  to  create  capital  for  people  Aviio  want  it. 

By  the  election  of  Polk  in  1844  the  South  gained  control  of  the 
government.  In  1845  the  cry  was  raised  that  the  tariff  was  in  danger. 
Meetings  were  held  to  protest  against  any  change.  The  project  of  Mr. 
Walker,  Secretary  of  the  Treasury,  was  the  old  soutl:\prn  plan  of  horizon- 
tal rates  and  ad  valorem  duties.  He  divided  nearly  all  imports  into  eight 
schedules  with  duties  at  100,  40,  30,  25,  30,  15, 10  and  5  per  cent,  ad  val- 
orem. This  bill  passed  the  House  114  to  94,  and  the  Senate  28  to  27, 
after  a  debate  and  a  public  excitement,  different  in  kind  but  scarcely  less 
in  degree  than  that  of  1832.  The  average  rate  of  duty  under  it  was  25^ 
per  cent,  on  dutiable,  until  1857.  By  the  Act  of  March  3,  1857,  the 
duties  were  lowered  to  an  average  rate  of  20|^  per  cent  on  dutiable. 

The  period  from  1846  to  1860  was  our  period  of  comparative  free 
trade.  The  Sub-Treasury  Act  of  1846  removed  subjects  of  currency  and 
banking  from  national  legislation.  Thus  these  two  topics  were  for  a 
time  laid  aside.  For  an  industrial  history  of  the  United  States,  no  period 
presents  greater  interest  than  this.  It  was  a  period  of  very  great  and  very 
solid  prosperity.  The  tariff  was  bad  and  vexatious  in  many  ways,  if  we 
regard  it  from  the  standpoint  either  of  free  trade  or  revenue  tariff,  but  its 
rates  were  low  and  its  effects  limited.  It  was  called  "  a  revenue  tariff  with 
incidental  protection."  The  manufactures  which,  it  had  been  said,  would 
perish,  did  not  perish,  and  did  not  gain  sudden  and  exorbitant  profits. 
They  made  steady  and  genuine  progress.  The  repeal  of  the  English  corn 
laws  in  1846  opened  a  large  market  for  American  agricultural  products, 
and  took  away  the  old  argument  which  Niles  and  Carey  had  used  with 
such  force,  that  England  wanted  other  countries  to  have  free  trade,  but 


PROTECTION  m  THE  UNITED  STATES.  55 

..ould  not  take  their  products.  THe  effect  on  both  countries  was  most 
happy.  It  seemed  as  if  the  old  system  was  gone  forever,  and  that  these 
two  great  nations,  with  free  industry  and  free  trade,  were  to  pour  in- 
creased wealth  upon  each  other.  The  fierce  dogmatism  of  protection  and 
its  deeply-rooted  prejudices  seemed  to  have  undergone  a  fatal  bloAv.  Out- 
shipping  rapidly  increased.  Our  cotton  crop  grew  larger  and  larger.  The 
discovery  of  gold  in  California  added  mightily  to  the  expansion  of  pros- 
perity. The  states  indeed  repeated  our  old  currency  follies,  and  the  panic 
of  1857  resulted,  hut  it  was  only  a  stumble  in  a  career  of  headlong  pros- 
perity. We  recovered  from  it  in  a  twelvemonth.  Slavery  agitation 
mj|rked  this  period  politically,  and  if  people  look  back  to  it  now  they 
think  most  of  that ;  but  industrially  and  economically,  and  I  will  add 
also,  in  the  administration  of  the  government,  the  period  from  the  Mex- 
ican to  the  civil  war  is  our  golden  age,  if  we  have  any.  There  was  sim- 
plicity, even  to  dullness,  in  national  affairs.  It  was  one  of  those  happy 
periods  when  a  nation  has  little  history.  As  far  as  the  balance  of  trade 
is  concerned,  it  never  was  more  regular  and  equal  than  in  this  period. 

The  Act  of  March  3,  1857,  was  called  for,  because  the  revenue  had 
risen  beyond  the  necessities  of  the  government,  and  the  debt  had  been 
reduced  to  an  insignificant  sum.  The  bill  lowered  duties  about  one 
quarter,  and  applied  especially  to  raw  materials  of  manufiicture.  In  the 
debate,  however,  strong  opposition  to  it  was  aroused,  and  no  little  old 
protectionism  was  called  out.  The  West  objected  to  the  reduction  on  raw 
materials,  especially  wool,  hemp  and  lead,  which  they  produced,  and 
threatened  to  resist  the  incidental  protection  to  Eastern  manufactures. 
This  brought  out  the  weakness  and  error  of  incidental  protection  in 
strong  light.  So  long  as  there  is  any  protection  the  argument  is  sure  to 
arise  under  this  form.  Those  who  are  not  protected  demand  that  rev- 
enue be  raised  from  products  similar  to  theirs  in  order  to  give  them  a 
share  in  the  incidental  benefit.  In  short  we  are  forced  either  to  protect 
all  or  to  protect  none,  and  we  see  distinctly  that  there  is  no  safe  position  to 
take  except  that  of  total  opposition  to  all  protection.  If  we  lay  any  duties 
which  act  protectively,  we  must  offset  them  by  excise  taxes,  that  no  bene- 
fit may  accrue. 

Congress  was  divided  in  1857  between  two  policies  for  the  reduction 
of  revenue,  and  was  embarrassed  by  a  novel  difficulty  in  legislation,  that 
of  getting  rid  of  a  surplus  which  threatened  worse  demoralization  than 
any  public  debt.  It  was  then  fully  perceived  that  by  reducing  taxes  rev- 
enue was  increased.  The  tariff  of '46  had  been  estimated  to  yield  about 
twenty  millions.  The  receipts  from  it  in  1856  were  over  sixty  millions. 
It  was  therefore  urged  that,  to  reduce  revenue,  duties  ought  to  be  raised 
and  used  for  protection. 

The  panic  of  1857,  of  course,  reduced  imports  and  lessened  revenue. 


56  PROTECTIOX  IX  THE  UNITED  STATES. 

In  1858  there  "was  a  recovery,  which  was  still  greater  in  1859.  In  1860 
political  troubles  produced  another  reduction.  The  expenses  of  the  gov- 
ernment in  the  meantime  increased  and  a  deficit  arose.  This  formed  the 
basis  for  the  new  effort  to  increase  duties.  The  real  motive,  however, 
was  political.  The  Republican  party  wanted  to  make  sure  of  Pennsyl- 
vania. That  state  was  aware  of  its  value  to  tlie  Union  and  to  the  party 
in  question.  As  a  member  of  the  Confederation,  no  one  would  have 
esteemed  it  less  than  any  other,  but  it  was  still  in  the  position  of  a  mem- 
ber of  the  family  who  wants  to  live  on  the  contributions  of  the  others- 
It  added  to  the  incongruity  of  the  situation  that  this  member  claimed  to 
be  possessed  of  means  of  wealth  surpassing  all  the  others,  but  he  could 
not  get  a  living  out  of  them.  He  would  not  be  idle  either,  but  insisted 
on  sinking  capital  in  unproductive  enterprises  and  calling  on  his  breth- 
ren to  make  up  his  losses. 

The  Eepublican  party  made  the  bargain.  Mr.  Morrill  introduced  his 
tariff  in  the  House,  March  12th,  1860,  and  it  was  passed.  The  Senate 
postjDoned  it  to  the  next  session.  In  June,  the  Chicago  Convention 
adopted  a  tariff  plank.  The  bill  came  up  at  the  next  session  and  passed 
the  Senate  February  20th,  1861,  by  a  vote  of  25  to  14,  seven  Southern 
States  having,  up  to  that  time,  seceded.  The  bill  passed  the  House 
promptly  by  a  large  vote,  and  was  signed  March  2d,  1861.  It  went  into 
operation  April  1st.  It  raised  duties  from  the  tariff  of  1857  about  one- 
third.  The  debate  hinged  upon  revenue  almost  entirely  and  showed  the 
result  of  fourteen  years'  education  in  comparative  free  trade. 

This  fact  is  well  worth  observing.  Ten  to  fifteen  years  suffice  to 
change  the  voting  pojiulation  and  to  educate  a  generation  in  one  set  of 
ideas  or  another.  Thus  the  traditions  of  one  policy  secure  a  certain  sta- 
bility within  that  period  and  men  lose  memory  of  any  other.  It  is 
always  difficult  for  men  to  realize  in  imagination,  or  by  description,  a 
social  condition  other  than  that  they  have  experienced.  The  power  to 
do  this  is  only  acquired  by  study  and  travel.  Hence  it  is  to-day  that 
most  people  acquiesce  in  the  paper  money  and  protectionist  fallacies  to 
which  we  have,  as  a  generation,  become  accustomed. 

The  Morrill  tariff  does  not  call  for  any  extended  notice,  because  it 
only  lasted  four  months.  A  new  act  became  a  law  on  August  5th,  18G1, 
which  raised  duties  from  the  date  of  its  passage.  It  was  a  revenue  act, 
jbut  contained  many  protectionist  jobs.  Tlie  immediate  result  was  that 
it  produced  effects  on  trade  which  legislators,  inexperienced  in  this  de- 
partment and  ignorant  of  the  laws  of  taxation,  did  not  foresee,  and  it  stim- 
ulated numberless  efforts  to  secure  for  other  "interests"  similar  ad- 
vantages. Another  act  of  December  24th,  1861,  increased  the  taxes  on 
tea,  coffee  and  sugar. 

In  1862  tlie  internal  taxes  were  laid.     They  were  extended  from  time 


PROTECTION  IN  THE   UNITED   STATES.  57 

to  time  without  method  or  intelligence,  bnt  they  proved  conclusirely 
enough  that  that  system  of  taxation  is  perfectly  feasible  in  this  country, 
and  that,  on  a  system  adjusted  to  the  best  modern  principles  of  taxation, 
it  could  be  used  here  as  well  or  better  than  anywhere  else  in  the  world. 
It  was  unpopular  and  produced  grumbling,  which  is  one  of  its  cliiif 
recommendations,  because  people  kneAV  what  they  were  paying,  and  they 
were  guarded  against  the  :!pathy  which  characterizes  them  in  regard  to 
import  duties.  The  latter  are  far  more  mischievous,  but  are  paid  uncon- 
sciously. The  time  will  come,  in  the  advance  of  enlightenment,  when  men 
will  demand  to  be  allowed  to  conduct  their  business  in  entire  freedom,  so 
as  to  make  as  much  as  they  can,  and  then  pay  taxes  which  they  must  pay 
out  of  the  net  proceeds,  and  when  they  would  as  soon  let  the  grocer  and 
butcher  draw  on  their  bank  accounts  without  presenting  a  bill,  as  let  the 
government  put  its  hands  in  their  pockets  for  taxes  when  they  do  not 
know  it.  It  would  be  an  amusing  experiment  if  this  government  should 
for  a  year  exact  by  internal  taxes  without  duties  the  same  sum  which  the 
tariff  now  costs  us,  and  then  pay  in  bounties  to  the  protected  interests 
the  sum  which  they  now  get. 

The  Act  of  July  14,  1862,  raised  duties  "temporarily."  The  joint 
resolution  of  April  29th,  1864,  raised  all  duties  fifty  per  cent,  for  sixty  days, 
afterwards  extended  to  ninety.  The  Act  of  June  30th,  1864,  was  a 
general  revision  for  revenue  and  protection.  It  was  represented  as  'a 
necessary  offset  to  the  internal  duties  and  as  a  temporary  war  tariff.  The 
Act  of  March  3d,  1865,  again  extended  and  complicated  the  system  by 
more  minute  subdivisions  and  classifications  and  by  enhanced  rates.  It 
involved  a  number  of  tricks  and  devices  intended  to  have  an  effect  which 
could  not  be  foreseen,  and  was  a  reckless  exertion  of  the  poAvers  which  had 
been  rediscovered  as  latent  in  this  kind  of  legislation.  The  Act  of 
July  28th,  1866,  revised  and  strenghtened  the  last  act,  by  various  pro- 
visions intended  to  clinch  its  operation. 

Tliese  are  the  acts  which  belong  directly  to  the  war  period.  The 
people  were  busy  in  war  making;  their  attention  was  absorbed  in  that 
direction.  Congress  itself  was  so  absorbed  in  this  business  that  the  ques- 
tions involved  in  tariff  did  not  obtain  consideration.  The  necessity  of 
getting  revenue  was  paramount,  and  there  was  no  scientific  knowledge 
of  the  principles  of  taxation  to  govern  the  attempt.  The  only  system 
employed  was  to  tax  everything,  and  if  more  revenue  was  wanted,  to  tax 
more  heavily.  The  people  submitted  patriotically,  because  they  thought 
it  necessary.  The  abundance  of  paper  money,  with  rising  prices  and 
great  speculation,  created  enormous  fortunes  and  produced  a  semblance  of 
prosperity.  People  thought  that  millions  of  men  could  leave  industry  and 
go  to  destroying  capital,  and  yet  the  nation  get  rich.  Under  such  circum- 
stances the  natural  consequence  was  that  the  social  parasites  found  a  grand 


53  PROTECTION  IN  THE   UNITED  STATES. 

-opportunit}-.  AVe  must  distinguish  here  two  kinds  of  protection;  the 
doctrinaire  protection  of  Clay,  Niles,  Carey  and  Greeley,  which  was  hona 
fide  belief  in  the  doctrine  as  a  theory  of  national  wealth,  and  the  in- 
terested protection  of  cliques  and  individuals,  who  employ  the  system 
only  for  selfish  ends.  The  latter  was  the  kind  which  arose  here  ten  years 
ago  and  under  which  we  are  now  living.  We  enjoyed  the  services,  as 
national  legislators,  of  Mr.  Morrell  and  Mr.  Stevens,  Pennsylvania  iron 
masters ;  Mr.  McCarthy,  for  the  New  York  Salt  Works ;  Mr.  Morrill,  for 
the  Vermont  sheep  raisers.  Our  Congress  was  beset  by  lobbyists,  who 
found  it  easier  to  speculate  by  moviug  legislation  than  by  cornering  the 
market ;  and  to  look  at  our  legislation  it  seemed  that  we  were  a  confedera- 
tion only  for  the  sake  of  holding  a  grand  scramble  at  Washington  to  see 
which  section  and  which  interest  should  worst  plunder  the  rest. 

The  system  was  elaborated  as  a  "  temporary  "  system — as  a  war  mea- 
sure— like  the  pajser  money,  and  we  have  been  living  under  it  ever  since. 
Too  many  people  find  their  interest  in  sustaining  it  to  let  it  fall  without 
a  struggle,  on  behalf  of  the  great  public  which  elects  all  the  Congress- 
men, but  finds  few  representatives.  The  internal  taxes,  which  formed 
the  excuse  for  a  large  part  of  tlio  advance  in  duties  have  been  gradually 
abolished,  and  the  whole  weight  of  destructive  restraint  is  left  to  fall  on 
the  industries  of  the  country.  Evidently  the  whole  policy  was  erroneous 
and  false,  even  from  tlie  point  of  view  adopted.  In  going  into  a  great 
war,  the  nation  wanted  its  powers  free.  It  wanted  cheapness  and  abund- 
ance then,  if  ever.  It  wanted  tlije  maximum  of  revenue  according  to  the 
most  approved  methods  of  obtaining  it.  It  was  no  time  to  re-undertake 
the  task  of  encouraging  industries,  even  if  that  ever  was  wise,  and  I  be- 
lieve that  the  historian,  when  he  comes  to  criticise  this  period  in  our 
history,  will  say  that  the  welfare  of  a  great  nation  never  was  so  recklessly 
sacrificed  by  ignorant  empiricism  in  legislation,  nor  the  patriotism  of  a 
great  people  ever  so  wantonly  abused,  as  in  the  tariff  legislation  of  our 
war.  Our  position  then  and  since  as  to  tariff"  and  paper  money  always 
reminds  me  of  one  of  the  blessings  of  Jacob :  "  Issachar  is  a  strong  ass, 
bowed  down  between  two  burdens.  And  he  saw  that  rest  was  good,  and 
the  land  that  it  was  pleasant,  and  bowed  his  shoulders  to  bear,  and  be- 
came a  servant  unto  tribute." 

I  come  now,  however,  to  the  most  shameful  chapter  in  the  whole 
{  irv.  In  18G7,  the  woolen  manufacturers  being  dissatisfied  with  the 
protection  they  enjoyed,  held  a  convention  at  Syracuse  to  exert  the  in- 
fluence which  was  due  to  the  importance  of  their  industry  on  legislation. 
Upon  their  arrival,  they  met  with  an  unexpected  obstacle.  Lo  !  there 
were  also  the  representatives  of  the  wool-growers.  These  latter  had  come 
to  Avatch  and  to  say  that  tliey  must  be  counted  in.  Obviously,  tlic  patli 
i  r^-"i'sdom  lay  in  an  alliance.     An  adjustment  to  satisfy  the  wool-grower.> 


PROTECTION  m  THE   UNITED  STATES.  59 

was  made,  and  the  tax  on  woolens  was  put  enough  higher  to  allow  for 
this.  The  tariff  there  concocted  was  enacted  into  a  law  March  2d,  1867. 
It  consisted  of  a  minute  classification,  and  a  complicated  graduated  rate 
which  has  tormented  the  woolen  industry  ever  since.  In  1868  and  1869, 
we  saw  mutton  a  drug  on  the  market  at  8  and  9  cts.,  when  beef  was  20.j 
The  farmers  who  had  been  deluded  into  relying  on  tariffs  to  produce 
wealth,  found  that  they  had  to  send  their  sheep  to  slaughter. 

The  woolen  interest  profited  no  better.  They  had  to  import  dirt 
from  Australia  when  they  wanted  wool.  If  the  price  advanced,  or  any 
turn  of  exchange  or  item  of  cost  carried  the  total  cost  over  12  cts.,  they 
found  a  higher  rate  of  duty  exacted,  and  the  importation  unprofitable. 
When  they  turned  to  the  home  supply  they  found  that  it  was  all  on  one 
grade,  and  that  they  were  deprived  of  the  advantage  of  mixing  wools  to 
make  various  fabrics.  Mills  were  started  by  ignorant  and  inexperienced 
persons  in  improper  places,  and  the  svipply  of  cloth,  all  on  one  grade, 
glutted  the  market.  In  1869  a  crisis  in  the  industry  occurred,  with 
numerous  failures.  Mills  were  sold  out  for  a  fraction  of  their  cost.  New 
proprietors  started,  with  a  smaller  capital  account,  and  there  has  since 
been  nothing  but  a  struggling  and  unremunerative  existence  for  this  in- 
dustry. 

In  1870  the  first  reduction  of  duties  took  place,  and  it  was  on  the  debate 
of  this  bill  that  the  old  divergence  as  to  the  principle  of  protection  reap- 
peared. The  sections  and  interests  were  so  completely  included  in  the  sys- 
tem that  there  was  little  clear,  complete  and  outspoken  advocacy  of  free  trade, 
such  as  the  South  used  to  offer.  Almost  every  member  had  a  reservation 
in  favor  of  the  interest  of  his  own  district.  It  only  proves  again  that  the 
system  must  be  assailed  as  a  whole.  Pig  iron  was  reduced  from  $9  to  $7 
per  ton.  The  other  reductions  were  chiefly  on  tea,  coffee,  sugar,  spices,  wines 
and  fruits,  things  which  ought  to  bear  taxes  if  anything  does.  In  1872, 
10  per  cent,  was  taken  from  the  duty  on  some  of  the  most  important  arti- 
cles in  the  tariff,  but  the  amount  was  restored  in  the  session  of  1874-5, 
by  what  was  called  the  "  little  tariff"  bill.  The  tariff  now  contains  1,500 
articles  and  specifications.  In  1874  the  average  rate  was  equivalent  to 
38-2-  per  cent,  on  dutiable  imports. 

In  the  mean  time  American  shipping  had  ceased  to  be.  Other  na- 
tions bought  shipping  and  sailed  it  at  a  profit,  if  they  could  not  build  it. 
We  prohibited  this.  Nevertheless,  under  even  this  utmost  exertion  of 
the  restrictive  system,  the  revival  of  our  shipping,  longingly  looked  for 
and  often  promised,  never  came.  Our  flag  is  kept  afloat  by  one  or  two 
subsidized  lines,  and  by  one  on  a  course  which  other  shipow^ners  have 
abandoned  as  unprofitable.  Perhaps  the  Pacific  Mail  Line  enlists  the 
pride  of  Americans.  From  time  to  time  it  is  proposed  to  go  on  and  sub- 
sidize ships,  in  order  to  force  the  long-desired  revival.     This  is  consistent 


60  PROTECTION  IN  THE  UNITED  STATES. 

at  least.  Having  taxed  tonnage  in  foreign  trade  out  of  existence,  and 
forbidden  the  transfer  of  foreign  built  ships  to  American  registers  in 
order  to  spite  the  shipowners  who  abandoned  our  flag  during  the  war,  we 
now  propose  to  tax  agriculture  and  commerce  back  again  to  provide  a 
fund  for  subsidizing  ships. 

Our  exports  have  likewise  been  killed  by  the  inevitable  operation  of 
the  tariff.  We  no  longer  offer  a  market  and  cannot  attract  miscellaneous 
orders.  We  cannot  export  to  countries  whose  products  we  do  not  take. 
We  cannot  trade  directly  with  South  America,  the  East  Indies,  or  Aus- 
tralia, even  for  the  exports  in  which  we  could  doubtless  compete  in  those 
markets,  because  we  refuse  to  take  their  products.  We  cannot  make 
roimd  voyages  because  no  one  could  tell  what  would  be  done  with  the 
tariff  at  home  during  the  interval  which  must  elapse.  Our  manufacturers 
having  secured  the  home  market,  find  that  the  home  market  becomes  a 
restraint,  not  an  advantage,  and  they  move  out  of  the  co'untry  in  order  to 
get  rid  of  the  ti'ammels  of  the  tariff  while  working  for  export.  Our  own 
sewing  machines  are  jirovided  for  foreign  nations  cheaper  than  we  can  get 
them  ourselves.  The  system  has  been  pushed  so  far,  and  its  complicated 
developments  have  become  so  interlocked  with  each  other  that  the  protec- 
tive system  is  to-day  a  dead  weight  on  all  the  production  of  the  country 
of  every  kind.  Its  complete  overthrow  would  be  a  grand  emancipation 
for  manufactures  as  well  as  for  everything  else. 

How  far  we  yet  are  from  anything  like  this  movement  was  shown  a 
few  weeks  ago  by  the  proposition  gravely  made,  and,  it  appears,  gravely 
entertained  at  Washington,  to  lay  discriminating  duties  so  as  to  bear  on 
the  civil  war  in  the  Island  of  Cuba.  The  taxing  power  is  the  greatest 
engine  controlled  by  governments,  and  it  has  been  used  or  abused  to  aid 
temperance,  to  restrain  luxury,  to  put  down  slavery  (the  English  discrim- 
inating duties  on  slave-grown  sugar),  to  coerce  belligerents  in  favor  of 
neutrals,  and,  in  this  last  case,  is  proposed  to  accomplish  an  interference 
in  a  foreign  struggle  with  which  we  could  not  interfere  justifiably  in  any 
way. 

This  completes  the  hasty  review  which  I  have  been  able,  under  the 
circumstances,  to  give  of  the  history  of  our  tariff  legislation.  Some 
things  seem  to  follow  from  it  so  evidently  that  no  one  can  contradict 
them. 

In  the  first  place  tliis  notion  that  there  is  some  means  to  increase,  by 
an  adjustment  of  taxes,  the  Avealth  of  a  country  has  had  a  very  full  trial 
amongst  us.  It  was  inherited  by  us  from  older  countries,  in  which  the 
pressure  of  population  on  the  means  of  subsistence  was  great,  and  the 
idea  of  the  functions  of  government  wide.  It  was  hostile  to  all  the  be- 
liefs and  habits  of  thought  of  the  American   people.     It  was  totally  in- 


PROTECTION  m  THE  UNITED  STATES.  61 

congruous  with  the  social  and  political  system  which  they  established.  It 
was  reluctantly  admitted  under  the  idea  that  a  new  country  may  need 
some  stimulus  and  assistance  at  the  outset.  In  this  view  it  is  forgotten 
that  the  stimulus  must  come  from  without  to  be  of  any  use,  and  that,  if 
it  is  sought  within,  it  can  only  be  obtained  by  depressing  one  part  to 
develop  another.  Nothing  is  created  by  the  system,  nor  ever  can  be.  It 
is  only  another  instance  of  the  folly  which  we  continually  commit  of  try- 
ing to  make  something  out  of  nothing,  or  to  lift  ourselves  by  our  boot- 
straps. As  I  have  shown,  the  curtailment  and  depression  fell  in  the  United 
States  on  agriculture.  In  England  it  fell  on  manufactures  for  the  benefit 
of  agriculture,  and  in  any  country,  old  or  new,  the  doctrine  holds  abso- 
lutely, that  whatever  means  of  wealth  it  has,  and  whatever  the  kind  may 
be,  they  work  up  to  their  maximum  when  they  work  freely. 

The  Americans  adopted  the  notion,  however,  that  they  could,  by  a 
few  years  of  self-denial,  get  certain  industries  started,  which  would  then 
'*go  alone  "  and  become  independent  sources  of  wealth.  I  not  only  affirm 
on  the  grounds  of  reason  and  science  that  such  a  theory  is  absurd  and 
fallacious,  but  I  now  appeal  to  the  century  of  history  as  a  complete  proof 
that  there  is  something  wrong  and  false  about  this  theory.  Where  are  the 
results?  Instead  of  strong,  independent  industries,  we  have  to-day  only 
a  hungry  and  clamorous  crowd  of  "infants."  We  are  told  that  our 
country  is  rich  in  everything  good  for  man,  and  every  new  discovery  of 
natural  sources  of  wealth  is  made  the  ground,  not  of  greater  abundance 
and  less  labor,  but  of  greater  scarcity  and  greater  labor.  Find  a  mine  of 
copper  in  the  United  States,  and  it  is  an  argument  for  making  it  harder 
for  the  people  of  the  United  States  to  get  copper  than  before.  We  used  to 
get  emery  to  supply  all  our  wants  by  giving  wheat  and  cotton  for  it ;  we 
did  not  know  we  had  any.  At  length  a  bed  of  ore  was  found  in  Massa- 
chusetts, and  the  first  step  was  to  get  legislation  to  make  the  American 
people  give  more  wheat  and  tobacco  for  emery  than  before.  The  same 
applies  to  all  our  great  resources,  until  it  might  be  worth  while  to  calcu- 
late how  much  more  iron,  coal,  copper  and  lead  the  people  of  the  United 
States  would  have  to-day,  if  there  was  not  a  particle  of  either  under  their 
soil,  than  they  now  possess.  There  is  immense  force,  apparently,  in  the 
fallacy  that  we  want  "  industries,"  when  in  fact  we  want  goods  to  supply 
our  needs;  in  the  idea  that  we  want  work,  when  in  fact  we  want  leisure. 
We  are  trying  to  sustain  life  on  the  face  of  the  earth,  and  we  find  it  hard 
work.  All  our  discoveries  and  inventions  have  for  their  object  to  make 
it  easier ;  that  is,  to  get  more  goods  for  the  same  labor,  and  to  sustain 
more,  or  more  highly  developed,  men.  For  this  we  want  leisure  from 
drndgery,  as  the  first  and  most  imperative  requisite.  Therefore,  every- 
thing which  gets  the  goods  and  lessens  the  labor  is  an  advance  in  civiliza- 
tion ;  and  everything  which  makes  more  labor  necessary  to  get  the  goods 


63  PBOTEGTION  IN  THE  UNITED  STATES. 

tends  to  barbarism.  Labor  for  material  good  is  simply  a  gross  necessity, 
wliich  we  are  all  the  time  trying  to  conquer  in  order  to  get  leisure  for 
pleasanter  and  higher  occupation,  and,  above  all  else,  it  follows  that  those 
whose  lives  are  all  spent  in  drudgery  over  material  needs  are  most  clogged 
in  their  efforts  for  emancipation  by  everything  which  increases  labor. 
Hence  this  aim  with  which  the  early  American  statesmen  set  out  has 
proved  a  chimera.  The  further  we  follow  it,  the  further  it  leads  us.  We 
get  more  industry  and  less  good. 

It  follows,  secondly,  from  this  history  that  this  continual  law-making 
about  industry  has  been  prolific  of  industrial  and  political  mischief.  It 
has  tainted  our  political  life  with  log-rolling,  presidential  wire-pulling, 
lobbying  and  custom  house  politics.  It  has  been  intertwined  with  cur- 
rency errors  all  the  way  along.  It  has  created  privileged  classes  in  the 
free  Americaa  community,  who  were  saved  from  the  risks  and  dangers  of 
business  to  which  the  rest  of  us  are  liable.  It  has  controlled  the  election 
of  Congressmen,  and  put  inferior  men  in  office,  whose  inferiority  has 
reacted  upon  the  nation  in  worse  and  worse  legislation.  Just  now  we  are 
undergoing  a  spasm  of  indignation  at  official  corruption,  and  we  want  to 
reform  the  civil  service,  but  there  is  only  one  way  to  accomplish  that,  and 
that  is  to  cut  up  the  whole  system  which  has  made  the  civil  service  what 
it  is.  It  is  of  little  use  to  cut  off  the  tops  of  the  weeds  and  leave  the 
roots  in  the  ground.  When  the  shower  passes  over  they  will  grow  up 
stouter  than  ever. 

I  have  presented  the  subject  to  you  historically,  because  it  is  the 
method  of  treatment  in  which  I  have  the  most  confidence.  It  is  to  his- 
tory that  we  must  look  for  the  facts  which  teach  us  social  and  economic 
laws,  and  form  the  basis  of  any  positive  treatment  of  social  questions^ 
For  a  full  exposition  it  would  be  necessary  to  follow  the  industrial  history 
of  the  country,  but  the  materials  for  such  a  history  of  this  country  are 
not  in  a  shape  to  be  available,  if  indeed  they  exist.  We  have  enough, 
however,  to  show  us  that  we  are  living  here  under  immutable  and  inexor- 
able laws  of  the  social  organization.  We  cannot  cheat  those  laws,  nor 
evade  them.  If  we  try  to  escape  their  operation  in  one  point,  they  avenge 
themselves  in  another.  We  cannot  manipulate  the  law  of  value,  so  as  to 
make  things  exchange  otherwise  than  in  the  ratio  of  supply  and  demand, 
without  losing  more  one.  way  than  we  gain  another.  We  cannot  legalize 
plunder  under  any  guise  whatever,  without  surely  wasting  wealth  and 
impoverishing  robbers  and  robbed  together.  We  cannot  arrange  any  sys- 
tem of  gambling  which  will  increase  wealth,  since  wealth  comes  only- 
from  labor  properly  applied.  We  cannot  employ  the  taxing  power  of  the 
government  to  increase  wealth,  but  only  to  diminish  it.  This  is  the  world 
and  human  life  as  they  are.  The  whole  protectionist  school,  in  its  various 
grades,  starts  out  with  discontent  with  this  world,  and  with  a  2'>riori 


PROTECTION  IN  THE  UNITED  STATES.  63 

assumption  in  regard  to  the  kind  of  world  they  would  like  to  make. 
They  are  not  contented  to  see  what  the  natural  chances  of  the  country 
are  and  then  to  go  to  work  to  develop  them.  They  make  up  their  minds 
first  what,  in  their  wisdom,  the  country  ought  to  be,  and  then  they  set  to 
work  to  force  it,  with  nature  or  against  nature,  into  that  form.  They  are 
not  contented  to  see  that  the  country  affords  by  nature  unexampled  oppor- 
tunities for  man  in  agriculture  and  commerce.  That  is  all  as  nothing  if 
it  cannot  be  one  other  thing  also.  They  are  not  satisfied  that  it  shall 
evidently  be  able  to  obtain  all  good  things  which  the  whole  world  produces 
by  exchange,  if  not  by  production.  They  form  to  themselves  dogmas  about 
exchange,  and  will  have  nothing  but  by  direct  production,  even  though  on 
the  whole  they  have  less.  So  they  set  to  work  to  devise  means  to  make  the 
sort  of  country  which  they  picture  to  themselves.  We  all  sometimes  grum- 
ble at  the  ills  of  life,  I  suppose ;  but  I,  for  one,  turn  back  from  the  study 
of  all  these  propositions  with  devout  thankfulness  that  we  live  in  a  world 
which  God  has  made,  and  that  these  gentlemen  may  mar,  but  they  cannot 
greatly  alter  it;  and,  looking  back  on  our  experience  of  what  they  have 
done  for  us,  I  think  we  may  all  submit  gladly  to  things  as  they  are  in  pref- 
erence to  the  notions  of  Niles  and  Carey  as  to  what  they  ought  to  be.  This 
is  a  world  in  which  toil  is  the  road  to  wealth.  It  is  a  world  in  which  in- 
dustry, economy,  prudence,  temperance,  are  sure  roads  to  health,  wealth, 
comfort  and  happiness,  if  men  will  only  Jeave  those  virtues  to  operate 
freely  under  the  laws  which  are  set  for  human  life.  It  is  a  world  in  which 
idleness,  extravagance,  dissipation  and  want  of  thrift  are  sternly  and 
piteously  punished ;  unless  men,  by  their  laws,  rob  virtue  of  its  rewards 
to  transfer  them  to  vice.  That  is  all  which  any  "  protection  "  ever  can 
do,  and  it  is  the  worst  injustice  which  law  can  perpetrate.  It  is  the  in- 
justice of  the  old  despotisms  and  caste  aristocracies,  and  of  all  systems  of 
class  legislation  and  privilege,  an  injustice  which  has  made  history  one 
long  record  of  revolutions  and  social  wars  and  broils  and  tumults.  We 
may  perpetrate  it  over  again  in  the  name  of  democracy,  but  we  may  be 
sure  we  shall  only  produce  the  same  results.  What  is  lacking  in  it  is 
liberty,  and  in  spite  of  the  boasts  of  men  about  liberty,  we  are  very  far  yet 
from  understanding  what  it  it.  It  is  nothing  but  the  removal  of  all 
restraints  which  hinder  any  individual  from  exercising  all  his  powers 
under  the  best  intelligence,  to  go  towards  happiness  by  the  path  of  virtue 
which  is  laid  down  for  us,  but  we  may  as  well  understand  that  it  brings 
with  it  the  chance  that  he  may,  blindly  and  ignorantly,  choose  the  path  of 
vice,  which  leads  to  ruin.  When  we  plead  for  liberty  we  plead  only  that 
those  of  us  who  want  to  choose  the  course  of  prosperity  and  solid  security 
may  be  left  free  to  do  so,  or  at  least,  that  we  may  not  be  burdened  in  the 
attempt.  When  we  ask  for  the  liberty  to  exchange  our  j^roducts  as  we 
will,  we  ask  only  that,  in  that  one  particular,  our  efforts  to  advance  our 
selves  may  be  left  free  to  exert  their  full  effect. 


64  PROTECTION  IN  THE  UNITED  STATES. 

This  brings  us  then  face  to  face  with  the  task  which  is  at  present  in- 
cumbent upon  us.  "We  must  have  recourse  to  the  means  which  are 
familiar  to  the  habits  of  our  people.  We  must  organize  societies  and  dif- 
fuse information.  We  must  meet  and  discuss,  and  seek  to  gain  and  to 
propagate  sound  ideas.  Our  own  welfare  and  that  of  our  children  de- 
pends upon  it.  If  we  are  to  have  a  fight,  and  we  may  expect  that  the 
whole  cohort  of  selfish  interests  will  make  a  strong  stand  for  the  control 
they  have  gained,  we  must  meet  it.  The  appeal  lies  to  the  great  agricul- 
tural interest,  which  is  the  chief  sufferer,  and  which  numbers  one -half  of 
all  the  population  of  the  country  engaged  in  any  occupation.  The  begin- 
nings may  be  small  and  not  very  encouraging,  but  there  is  immense  faith 
to  be  placed  in  sound  and  true  doctrine  when  it  is  fairly  and  plainly 
taught,  and  it  is  impossible  that  a  system  of  legislation  so  shameful  and 
ignorant  as  our  present  tariff  legislation  can  long  disgrace  a  free  country. 


w.  G.  &UMXER.]  ^     PROTECTIVE    TAXES    AND    WAGES, 


THE  MERMAN  FREE  TRADER-SUPPLEMENT. 

W.  G.  SUMNEfe. 

Philadelphia,  Pa.,  October  14,  1882. 


G.  SuMNEE,  of  New  Haven,  Conn.,  addressed  the  Commis- 
follows : 

N/  rhave  noticed  tbat  in  the  discussions  which  have  taken  place  before 
this  Commission  there  has  been  a  constant  reiteration  of  some  false  doc- 
trines of  theoretical  political  economy  about  wages.  If  there  is  to  be 
any  theoretical  political  economy  admitted,  it  is  worthwhile  to  have  it 
correct.  I  have  therefore  thought  that  it  might  be  proper  for  me,  as  a 
professional  student  of  political  economy,  to  appear  here  and  read  a 
paper  setting  forth  the  true  relations  between  protective  taxes  and  wages. 
I  learn  from  the  reports  of  the  proceedings  before  this  Commission  that 
some  people  believe  that  protective  taxes  make  wages  high,  and  at  the 
same  time  that  high  wages  make  protective  taxes  necessarj^.  If  the 
Commission  should  act  on  these  two  doctrines  it  would  first  raise  taxes 
in  order  to  raise  wages  in  obedience  to  a  delegation  of  workmen,  and 
then  raise  taxes  again  in  order  to  offset  the  previous  increase,  in  the 
interest  of  a  delegation  of  employers,  and  so  on  forever.  These  two 
notions,  therefore,  contradict  each  other,  and  produce  an  absurdity. 
They  are  both  fsilse.  Protective  taxes  lower  wages,  and  high  wages 
are  a  reason  for  free  trade,  not  for  protection.  These  two  i)ropositions 
confirm  and  sustain  each  other,  and  so  ratify  the  truth  of  each. 

The  interests  of  the  man  who  pays  wages  and  those  of  the  man  who 
receives  wages  are  antagonistic.  The  one  wants  wages  low  and  the  other 
wants  wages  high.  The  protectionist  legislator  pretends  to  step  in  be- 
tween them  and  satisfy  both  at  once.  He  pretends  to  make  both 
parties  happy  at  once.  "I  am  going  to  make  your  wages  high,"  says 
he  to  the  wage  receiver.  "What,  then,  will  become  of  me?"  says  the 
wage  payer.  "I  will  make  wages  low  for  you,"  he  replies.  "How  is 
that,"  cry  the  laborers  and  all  their  friends,  "  you  are  going  to  make 
wages  low  ? "  "  No,"  replies  the  legislator,  "  I  mean  tbat  1  will  make  the 
l^rice  of  the  products  high,  which  will  have  the  same  effect  for  the  em- 
ployer." "But  how  is  that,"  cry  the  consumers,  "you  mean  to  make 
prices  high  by  law  .' "  "  No,"  replies  the  legislator,  "  I  do  not  really  make 
prices  high;  it  only  looks  so.  My  measures  really  make  prices  low." 
We  have  here,  then,  the  greatest  miracle  that  has  ever  been  accom- 
l)lished.  We  have  heard  of  making  something  out  of  nothing,  but  here 
we  have  creation  and  destruction  in  one  and  the  same  act.  Certainly 
the  problem  of  universal  happiness  is  solved  if  we  have  found  out  how 
those  who  buy  need  pay  little,  and  those  who  sell  may  at  the  same  time 
receive  much;  how  prices  may  be  raised  for  the  producer  and  lowered 
for  the  consumer  both  at  the  same  time.  As  we  are  all  i)roducers  and 
all  consumers,  we  may  all  sell  at  the  high  prices,  and  all  buy  at  the  low 
ones,  and  all  get  rich  together.  This  is  why  it  is  that  the  i)rotected 
numufacturers  are  found  bulling  what  they  are  short  of  (that  is,  labor) 
and  bearing  what  they  are  long  of  (that  is,  products).  They  have  dis- 
covered this  wonderful  system  by  which  all  are  to  bull  everything  and 
bear  everything  at  the  sanu;  time,  aiul  win  a  big  difference  out  of  noth- 
ing. No  wonder  the  protectionists  are  enraged  at  the  economists  who 
are  still  stupidly  teaching  that  we  can  produce  nothing  except  by  ap- 
plying labor  and  capital  to  land. 
1  su 


2  TARIFF    COMMISSION.  Iw.  <•..  sumnek. 

Who  is  tlie  beneficent  genie,  now,  who  works  all  the  inagic  of  the 
protectionist  system!  It  is  tax.  If  taxes  are  only  rightly  adjusted, 
says  the  protectionist,  they  make  wages  high  and  low  and  ])rices  high 
and  low  both  at  the  same  time.  When  one  hears  this  kind  of  nonsense 
one  is  forced  to  believe  that  the  sum  of  sui)erstitiou  in  the  world  is  a 
constant  quantity.  Superstition  is  a  defective  sense  of  causation.  The 
savage  who  wears  a  bone  tied  to  his  arm  as  a  fetich  to  ward  off  misfor- 
tune, believes  that  there  is  a  connection  of  cause  and  effect  where  there 
is  none.  The  astrologer  thought  that  the  relations  of  the  i)lanets  to 
each  other  affected  the  fate  of  persons  horn  at  a  certain  time.  He  saw 
a  connection  of  cause  and  effect  where  there  is  none.  The  protectiouist 
legislator  lays  a  tax  and  goes  home  secure  in  the  faith  that  wages  will 
be  high,  prices  low,  and  prosperity  stable,  as  if  there  were  a  fixed, 
direct,  and  inevitable  law  of  nature  connecting  taxes  with  social  welfare 
and  nothing  else.  This  superstition  is  more  wild  than  fetichism  or  as- 
trology. 

In  discussing  the  effects  of  taxation  ambiguity  is  often  introduced  by 
not  distinguishing  carefully  the  alternatives  which  may  be  imagined. 
If  we  could  imagine  a  state  of  society  in  which  vice,  passion,  and  other 
destructive  forces  no  longer  existed,  government  could  be  dispensed 
with,  or  it  would  sink  into  some  low  form  of  co-operation  for  common 
purposes.  Taxes  could  then  be  dispensed  with.  If  we  compare  our 
present  condition  with  any  such  ideal  state  of  things,  all  taxes  are 
minus  quantities,  reducing  by  so  much  the  available  wealth  and  attain- 
able comfort  of  the  community.  But  such  an  ideal  is  a  mere  poetic " 
dream.  If  we  had  no  government  we  should  have  vice  and  passion 
running  triumphantly  through  society,  wasting  and  destroying  on  every 
side.  Comparing  our  present  condition  with  that  state  of  things,  the 
taxes  which  we  i^ay  for  security,  peace,  and  order  as  products  of  civil 
government  are  a  small  loss  incurred  to  prevent  a  great  one.  Such  is 
the  only  sensible  and  correct  \iew  of  taxes.  They  are  never  anything 
but  loss  and  diminution  of  wealth,  and  it  is  as  impossible  to  convert  them 
into  productive  forces  as  it  would  be  to  make  destruction  create,  or  waste 
save.  Every  tax  is  on  the  defensive,  so  to  speak.  It  is  necessary  to  justify 
every  cent  which  is  drawn  from  the  community  by  taxes  and  to  sliow  that 
all  the  capital  thus  consumed  is  necessary,  under  the  existing  order  of 
things,  to  secure  the  protection  of  society,  on  the  cheapest  terms,  against 
the  forces  which  would  disturb  security,  peace,  and  order.  If  the  taxes 
were  large  enough,  they  might,  as  in  Kgypt  or  Turkey,  almost  take  the 
place  of  the  evils  against  which  governments  pretend  to  guard  society. 
Every  unnecessary  cent  of  taxation  is,  therefore,  a  pure  evil.  Go\'ern- 
ment  in  Egypt  and  Turkey,  and  in  much  of  Asia,  is  not  an  organization 
to  defend  society  against  evils.  It  is  only  an  organixation  by  which 
some  plunder  all  the  rest,  and  taxes  are  the  means  l)y  which  they  do  it. 
Wherever  any  taxes  are  laid  for  any  other  pui])ose  than  to  juovide 
civil  order,  peace,  and  security,  government  ai)proaches  by  just  so  much 
towards  the  Turkish  ])attern.  Such  is  the  case  whenever  protective 
taxes  are  laid. 

Taxes  wliich  ward  otf  greater  evils  at  th(^  lowest  practicable  cost  are 
economical.  They  do  not  lessen  the  average  comfort  of  the  people. 
Taxes  which  do  not  conform  to  this  descrii)tion  <lo  lower  the  average 
comfort  of  all  classes  of  the  ])eo])le.  The  wages  class  has  no  separate 
interest  in  the  matter  which  cither  can  be  or  ought  to  be  considered  by 
itself.  It  is  pure  demagogism  to  say  that  it  is  th(^  business  of  the 
government  to  make  wages  high.  If  I  discuss  the  effect  of  taxes  on 
wages,  it  is  only  by  way  of  meeting  the  (piestion  in  tiie  form  in  which 


w.  G.  suMNEH.l  PROTECTIVE    TAXES    AND    WAGES.  3 

it  is  raised.  Protective  taxes  do  not  aim  to  produce  good  government, 
or  to  accomplish  any  civil  purpose  at  all.  Their  aim  is  industrial.  They 
are  planned  to  help  some  people  to  get  a  living.  They  interfere,  on  be- 
half of  certain  i)ersons,  with  the  conditions  of  production  and  the  rela- 
tions of  competition.  A  man  who  engages  in  a  i^rotected  industry  has 
some  other  reliance  in  his  business  than  his  own  capital,  energy,  enter- 
piise,  i)rudence,  «S:c.  The  man  who  is  in  an  unprotected  industry  has 
something  more  to  guard  against  and  contend  with  than  the  problems 
of  his  industry  and  the  difticulties  of  the  market.  One  of  these  parties 
has  a  special  advantage  created  by  law  at  the  expense  of  the  other 
party,  who  is  therefore  under  a  special  disadvantage.  These  protective 
taxes,  therefore,  cannot  be  defended  or  Justified  under  a  sound  view  of 
the  function  and  justifiability  of  taxation.  They  waste  labor  and  capi- 
tal, and  keep  the  wealth  of  the  country  less  than  it  might  be  for  the 
labor  and  capital  which  have  been  expended.  Let  us  examine  in  par- 
ticular their  effect  on  wages. 

Anything  which  lessens  the  number  of  persons  competing  for  wages, 
or  which  increases  the  amount  of  capital  which  may  be  divided  in 
wages,  increases  wages.  In  a  new  country  in  which  there  is  an  im- 
mense amount  of  unoccupied  laud,  and  in  which  the  amount  of  cipital 
required  for  tilling  the  soil  is  snuill,  any  man  who  has  a  pair  of  stout 
hands,  although  he  has  no  skill  and  very  little  capital,  may  become  a 
land  owner  and  agriculturist.  He  is  then  withdrawn  from  the  wages 
class;  he  lessens  the  supply  of  labor  in  the  labor  market;  and,  as  an 
independent  producer,  he  contributes  all  the  time  to  the  capital  of  the 
country.  Every  man  of  the  unskilled  labor  class,  therefore,  has  an 
alternative  oftennl  to  him.  He  is  never  driven  l)y  starvation  into  a 
desperate  competition  with  others  in  the  same  predicament  to  work  for 
low  wages.  He  is  on  the  right  side  of  the  nmrket.  Supply  and  de- 
mand are  in  his  favor.  He  owns  a  thing  for  which  there  is  a  high  de- 
mand in  the  market.  The  comfort  he  could  win  on  the  land  fixes  a 
minimum  below  which  wages  cannot  fall.  If  they  do  temporarily  fall 
below  that  minimum,  the  laborers  take  to  the  land,  as  they  did  in  the 
hard  times  a  few  years  ago.  Since  the  comfort  obtaiimble  from  an 
abundance  of  cheap  and  fertile  land  is  high,  the  minimum  of  wages  is 
high.  This  makes  the  average  wages  of  the  country  high.  High  wages, 
therefore,  simply  mean  that  the  soil  of  this  continent  is  rich,  the  climate 
is  excellent  and  well  varied,  the  rivers  are  large  and  convenient,  the 
mountains  are  full  of  metal  and  coal,  the  people  are  industrious  and 
energetic  and  are  eager  to  accumulate,  the  i)ublic  order  is  fairly  secure, 
and  the  general  intelligence  is  good.  The  conditions  of  production  are, 
therefore,  good,  and  we  i)rodnce  a  great  deal.  We  accumulate  capital 
far  more  rapidly  than  any  other  people  in  the  world. 

It  is  one  of  the  humorsof  the  tariff  that  the  politician  appears  at  this 
stage  and  says,  "Oh,  no!  you  are  quite  wrong  in  attributing  the  pros- 
l)erity  of  the  country  to  those  causes.  It  was  I  who  did  it,  with  my  lit- 
tle taxes.  The  country  has  prosi)ered  because  I  taxed  it  vigorously. 
If  1  had  not  i)ut  on  my  taxes  the  country  would  have  been  "ruined." 
He  aigues  that  an  industrious  people  on  a  fertile  soil  could  not  have  got 
food  and  clothing  out  of  it  if  they  had  not  had  the  right  taxes.  A 
further  toucn  of  the  ridiculous,  however,  is  added  by  those  politicians 
who  dechiim  about  the  dignity  of  the  American  labortM-.  To  listen 
to  the  speeches  and  read  the  editorials,  one  would  think  ixditicians 
fornuMl  a  standard  of  comfort  which  they  tliought  suitable  for  the  Amer- 
ican laborer  and  then  Just  passe<l  tile  right  laws  to  get  it  for  him.  It 
is  said  that  (>i(r  lalxners  ougiit  not  to  be  on  the  standard  of  comfort 


4  TARIFF    COMMISSION.  [w  c.  sumnek. 

of  European  paupers.  It  must  be,  then,  that  the  American  sovereign 
can  formuhite  his  demands  on  nature.  He  makes  up  his  mind  what  is 
suitable  to  his  owu  majesty,  and  serves  notice  on  nature  to  provide  it. 
His  attorney,  the  politician,  justly  indignant  that  nature  does  not  re- 
spond, passes  a  law  to  secure  the  becoming  thing  for  his  noble  client, 
the  American  laborer.  In  this  view  of  the  matter,  certain  persons  are 
"  nature's  noblemen"  in  a  sense  not  heretofore  used.  A  little  examina- 
tion shows  us,  however,  that  we  are  only  dealing  with  an  old  fraud  un- 
der a  new  face.  The  old-fashioned  nobleman  drew  his  drafts  not  on 
nature  but  on  his  fellow-citizens,  and,  as  his  friends  were  in  control  of 
the  government,  they  got  payment  for  him.  The  American  sovereign 
can  get  nothing  from  nature  which  he  does  not  earn.  If  the  politician 
meddles  in  the  matter  he  can  only  rob  one  sovereign  to  favor  another. 
That  is  all  that  he  ever  has  done.  That  process  has  never  made  us  any 
richer,  but  only  poorer. 

Under  the  conditions  of  the  United  States,  a  tax  on  immigrants  would 
probably  lower  wages,  not  raise  them.  The  country  is  underpopulated. 
So  long  as  there  is  an  immense  amount  of  unoccupied  laud  the  immi- 
grants do  not  go  to  swell  the  wages  class ;  they  go  upon  the  land,  they 
open  it  uj),  win  wealth  from  it,  and  contribute  to  the  capital  of  the 
country.  Each  newcomer  who  is  industrious,  counts  more  as  a  pair  of 
new  hands  to  produce,  than  as  another  mouth  to  consume,  and  he  may 
well  add  to  the  average  wealth  j^erhead.  Taxation  has  not  even,  there- 
fore, in  this  country,  the  field  which  it  might  have  in  some  countries, 
if  it  were  used  to  keep  competitors  out  of  the  labor  market. 

If  a  tax  on  laborers  could  not  raise  wages,  certainly  no  tax  on  com- 
modities can  do  so.  Protective  taxes  aim  to  keep  certain  foreign  commodi- 
ties out  of  the  country.  An  army  of  custom-house  officers  must  therefore 
be  supported,  not  to  collect  revenue,  but  to  prevent  rev^enuefrom  being 
collected.  This  device  is  kept  up  in  order  to  secure  the  home  market 
to  the  home  producer.  The  home  producer  carries  on  his  business  at  a 
loss.  He  says  that  he  would  lose  capital  if  it  were  not  for  the  tariff. 
His  industry,  he  says,  would  not  exist  if  it  were  not  for  the  tariff.  It 
is  therefore  conducted  at  a  loss  all  the  time,  only  that  the  loss  is  not 
borne  by  the  persons  carrying  on  the  business,  but  by  the  consumers 
of  the  goods.  The  protective  system,  therefore,  involves  the  following 
expenditures  :  The  pay  of  all  the  custom-house  expenditures  to  keep  up 
the  system  ;  wages  and  profits  to  all  those  who  are  carrying  on  the  pro- 
ductive industries;  the  losses  incurred  by  the  protected  industries.  All 
these  outgoes  must  be  borne  by  the  non-protected  in  order  that  there  may 
be  less  goods  of  all  kinds  in  the  country  than  there  might  be  under 
free  trade.  How,  then,  can  protection  increase  wages,  or  the  average 
amount  of  these  goods  which  can  be  obtained  by  each  laborer  in  the 
country?  There  could  not  be  a  more  flagrant  error.  If  there  is  any- 
thing cheap  anywhere  the  protectionists  spring  into  activity  to  keep 
the  Am('ri(.'an  people  from  getting  it.  If  there  is  an  abundance  of 
food,  clothing,  furniture,  and  other  supplies  which  is  offered  to  the 
American  people  on  easy  terms,  the  protectionists  call  it  an  "inun- 
dation," and  run  to  set  a  barrier  against  it.  A  few  weeks  ago  I  saw 
a  hundred  women  waiting  for  hours  on  the  sidcMalk  for  the  opening 
of  a  store  at  which  some  fire-damaged  goods  Mere  to  be  sold  (;heap. 
A  ])r()tectionist  must  hold  that  those  women  were  insane,  or  that  they 
Avere  selfishly  ruining  the  country.  It  is  impossible  to  raise  wages  by 
o]>])osing  cliea])ii('.ss  and  abundance.  The  ])rot«'ctive  system  hssseus 
wealth  and  until  somebody  invents  an  arithuietic  according  to  which  10 
will  go  in  70  more  times  than  it  will  in  100,  it  is  certatain  that  smaller 


w.fl.  SUMNER.]  PROTECTIVE    TAXES    AND    WAGES.  5 

(liviileud  will  give  a  smaller  share  to  each  person.  The  protective  sys- 
tem, therefore,  lowers  wages. 

Let  us  next  look  at  the  efteet  of  i)rotective  taxes  on  the  alternative 
which  is  open  to  the  American  laborer  to  go  upon  the  laud.  The  pro- 
tective taxes  enhance  the  cost  of  all  articles  of  clothing,  furniture, 
crockery,  utensils,  tools,  and  machinery.  They  also  increase  the  cost  of 
fuel  and  transportation.  They  therefore  reduce  the  amount  of  all  the 
commodities  mentioned  which  a  farmer  can  get  for  a  certain  amount  of 
farm  products.  They  therefore  lessen  the  profits  of  agriculture  in  all 
its  forms,  and  lessen  the  attractiveness  of  the  laud.  Whatever  lessens 
the  attractiveness  of  the  land  lowers  the  minimum  gain  of  all  manual 
laborers,  increases  the  number  of  competitors  in  the  labor  market,  and 
reduces  the  amount  which  the  employer  needs  to  bid  in  order  to  coun- 
teract the  advantages  of  the  land.  Protective  taxes,  therefore,  take  away 
from  the  laborer  the  advantage  which  he  has  by  nature  in  this  country; 
that  is  to  say,  tliey  take  away  from  him  part  of  his  advantage  in  the 
labor  market.     Consequently,  they  lower  wages. 

It  has  been  affirmed  by  protectionists  that  their  system  increases 
capital.  Two  ways  have  been  alleged  in  which  it  does  this,  (1)  by  im- 
proving the  organization  of  labor,  (2)  by  bringing  capital  into  use  which 
would  otherwise  be  idle. 

1.  The  people  of  this  country  are  all  the  time  exercising  their  utmost 
ingenuity  to  organize  their  industry  to  the  highest  advantage.  Partly 
they  do  this  by  instinct.  Plenty  of  people  never  heard  of  the  "organ- 
ization of  industry,''  but  they  are  constantly  arranging  their  business 
to  save  labor  and  so  gain  time  and  prevent  waste.  They  are  also  con- 
stantly laboring  intelligently  to  secure  a  better  organization  of  industry. 
But,  after  they  have  exhausted  their  ingenuity,  the  protective  system 
assumes  that  some  other  persons,  viz,  politicians  and  legislators,  can 
see  some  better  organization  than  the  persons  engaged  in  industry  have 
themselves  been  able  to  devise.  If  one  part  of  the  American  people 
have  not  invented  the  best  organization  of  labor,  we  have  no  one  else  to 
call  upon  than  some  other  portion  of  the  American  people,  and  we  must 
appeal  from  the  men  of  business  to  the  politicians.  The  politicians,  then, 
as  an  incident  to  their  own  occupations,  rectify  the  errors  and  short- 
comings of  the  business  men.  The  mode  they  employ  is  taxes.  It  is 
the  same  old  magic.  But  the  business  men  have  to  bring  intelligence 
to  bear  on  the  organization  of  labor,  while  the  protectionist  legislator 
never  has  brought  any  intelligence  at  all  to  bear  on  the  i^roblem,  and  he 
never  can.  Protective  taxes  have  never  been  laid  in  view  of  any  true 
knowledge  of  the  industrial  circumstances,  and  they  never  can  be.  A 
thousand  commissions,  sitting  for  ten  years,  and  actually  engaging  in  a 
real  study  of  the  industries  of  this  country,  could  not  win  a  knowledge 
of  our  industrial  system,  aiul  if  they  could  acquire  such  knowledge  of 
the  industrial  system  as  it  exists  on  a  given  day,  their  knowledge  would 
not  be  good  for  anything  the  day  after,  on  account  of  the  new  inventions, 
discoveries,  processes,  lines  of  transportation,  tinancial  arrangements, 
and  so  on. 

We  have  here  now  tifty  millions  of  people  spread  over  a  continent 
with  great  varieties  of  climate  and  soil,  and  we  constitute  the  most  en- 
ergetic, restless,  and  indefatigable  nation  which  has  ever  existed.  To 
try  to  plan  a  system  of  artificial  relations  of  industry  for  such  a  nation  is 
the  most  ridiculous  undertaking  that  could  be  proposed.  Any  one  who 
talks  of  reaching  a  permanent  adjustment  of  the  tariff  to  tit  the  needs 
of  all  interests  and  do  injustice  to  none  is  talking  the  wildest  nonsense. 
Nothing  less  than  the  jmpersonal  forces  of  nature  can  adjust  interests 


6  TARIFF    COMMISSION.  (w.  g.  sumnek. 

under  such  conditions,  and  there  is  only  one  thing  which  can  be  predi- 
cated of  any  steps  taken  by  the  statesman,  that  is,  that  he  will  make 
mischief.  A  man  who  is  running-  a  railroad  easily  sees  what  crude 
nonsense  people  talk  abont  railroading  when  they  know  nothing  of  the 
business.  A  banker  makes  the  same  observation.  So  does  every  other 
man  in  his  own  line.  What  chance  is  there,  then,  that  politicians  can 
deal  wisely  with  the  thousands  of  industries  and  interests  in  this  coun- 
try in  all  their  manifold  and  complex  relations  to  eacli  other.  We  might 
as  well  try  to  establish,  by  legislation,  a  system  of  health  which  would 
prevent  the  peoi)le  of  the  United  States  from  ever  being  sick  any  more. 

Furthermore,  the  politicians  never  try  to  deal  with  the  whole  com- 
bination of  industrial  interests.  They  listen  only  to  the  most  clam- 
orous. They  heed  only  those  who  win  influence  and  so  secure  the  po- 
sition of  favorites.  They  never  bring  any  intelligence  to  bear  on  the 
question.  How  much  assistance  is  needed  ?  There  never  is  any  ad- 
justment of  means  to  ends.  No  tests  are  ever  applied;  no  guarantees 
are  ever  given  ;  no  subsequent  reports  are  ever  made  by  the  recipients 
of  favor  to  show  results  for  the  expenditure.  Each  interest  comes  for- 
ward and  asks  for  lavor  and  gets  it  for  no  reason  save  because  it  asked 
for  it.  The  petitioner  thinks  that  about  so  much  per  cent,  will  do  and 
does  not  himself  know  or  ever  try  to  calculate  what  will  be  the  effect 
of  that  much  protection  to  him  when  offset  by  all  the  taxes  to  which 
he  must  submit  in  behalf  of  others  in  order  that  the  system  may  be 
completed.  Mr.  Peter  Cooper  says  that  the  tarift'  ought  to  just  about 
offset  the  difierence  between  American  and  European  wages.  If  that 
could  be  done  and  were  done,  it  would  just  take  away  from  the  Amer- 
ican laborer  those  superior  advantages  which  made  him  or  his  ancestors 
come  across  the  ocean.  Now,  from  this  tangle  of  absurdities  and  con- 
tradictious, and  ignorances,  and  guesses,  it  is  expected  that  guidance 
will  come  which  shall  lead  the  American  producer  to  a  better  organi- 
zation of  industry  than  he  could  arrive  at  if  left  alone,  so  that  greater 
accommodation  of  capital  and  larger  wages  would  follow.  From  such 
causes  no  result,  save  waste  and  loss,  can  ensue  with  reduction  of  cap- 
ital and  lowering  of  wages. 

2.  It  is  alleged,  in  the  second  place,  that  protection  brings  capital 
into  use  which  would  otherwise  be  idle.  Every  one  of  us  who  has  any 
capital  is  anxious  to  put  it  to  productive  use  without  delay.  It  is  im- 
possible, in  the  nature  of  things,  to  keep  all  capital  all  the  time  em- 
ployed. Improvements  (such  as  a  better  credit  system)  which  make 
this  more  fully  realizable  are  eagerly  adopted.  The  argument  I  have 
quoted  means  that  in  spite  of  this  eagerness,  and  in  spite  of  the  chances 
for  employing  capital  on  a  new  continent,  some  portion  of  the  capital 
now  in  protected  industries  would  not  be  in  use  if  it  were  not  for  pro- 
tection.    Such  a  notion  is  beneath  discussion. 

There  is,  then,  no  way  in  wliich  ])rotective  taxes  can  produce  capital. 
Every  analysis  shows  that  they  waste  it.  Not  a  cent  can  come  to  A.  by 
the  action  of  tha  tariff  which  does  not  come  from  ]>.  The  consequence 
of  universal  borrowing  or  stealing  or  gift-making,  however,  is  not  to  in- 
crease ca])ital  but  to  waste  it.  IJence  i)r<)tective  taxes  lower  wages. 
The  laborers  have  been  exhorted  to  vote  for  protection  lest  their  wages 
should  V)e  reduced  to  European  rates.  L  have  shown  that  the  rate  of 
wages  obtain(Hl  here  is  due  to  the  economic  forces  at  work  in  this  coun- 
try. There  is  only  one  thing  which  could  reduce  American  wages  to 
Euro])ean  standards,  and  that  is  protective  taxes  applied  long  enough 
and  with  suflicient  weight. 

There  is,  however,  another  argument  which  must  be  considered  in 


w.  G.  SLMXER.]  PROTECTIVE    TAXES    AND    WAGES.  7 

this  connectiou.  It  is  said  that  imder  free  trade  all  our  i)opulation 
would  go  iuto  agriculture,  aud  that  wages  and  all  other  remuneration 
for  labor  would  be  reduced  until  we  sliould  all  be  in  proverty  together. 
Hence  the  agriculturists,  and  the  mechanical  laborers,  too,  are  exhorted 
to  support  a  wide  protective  system  in  order  to  diversify  industry  and 
prevent  ruinous  competition. 

We  have  seen  above  that  the  direct  cost  of  keeping  up  the  protective 
system  consists  of  three  items  :  (1)  payment  of  custom-house  officers  to 
keej)  §-oods  out;  (2)  support  of  laborers  and  profit  on  capital  in  pro- 
tected industries ;  (3)  the  losses  of  the  i^rotected  industries.  These  costs 
must  be  paid  to  buy  oft'  competition. 

In  the  first  place,  it  can  pay  no  one  to  buy  oft"  competition  unless  he 
has  a  monopoly.  Protected  industries  have  done  it  sometimes.  Amer- 
ican farmers  share  the  world's  market  with  a  number  of  strong  compet- 
itors. If  they  buy  oft"  the  comjietition  of  American  manufacturers  they 
must  bear  all  the  cost  of  it,  and  they  must  share  the  gain,  if  any,  with 
all  the  agriculturists  in  the  world.  That  means  that  if  thej'  try  it 
they  will  i)ut  themselves  at  a  great  disadvantage  with  their  own  com- 
petitors in  the  world's  market. 

In  the  second  place,  all  the  protected  industries  of  this  country  are 
now  parasites  on  the  naturally  strong  industries.  Agriculture  now  suj)- 
ports  itself  and  all  the  rest  and  all  their  losses.  Therefore,  even  if  it 
were  true  that  all  the  poi)ulation  would,  under  free  trade,  take  to  agri- 
culture, it  is  mathematically  certain  that  agriculture  could  support  them 
all  better  directly  than  under  the  present  arrangement. 

The  farmers  would  indeed  gain  a  great  deal  if  the  protected  i)eople 
would  keep  still  and  not  do  anything,  for  then  they  would  at  least 
waste  nothing.  The  earnings  of  farmers  and  the  wages  of  laborers 
would  then  not  be  reduced  so  much  as  they  are  now.  The  protectionist 
theor}',  however,  is  that  it  increases  wages  to  keej)  on  an  occupation 
which  wastes  capital  and  lessens  all  the  time  the  goods  within  reach 
of  the  population.  It  is  interesting  to  apply  this  theory  to  some  other 
cases. 

On  the  protectionist  theory  it  would  be  a  means  of  raising  wages  to 
keep  up  a  big  standing  army.  All  the  soldiers  would  be  withdrawn 
from  competition  in  the  labor  market,  and  would  consume  while  pro- 
ducing nothing.  In  time  of  peace  they  would  not  be  destroying  any- 
thing; but  in  time  of  war  they  would  be  just  like  a  protected  industry, 
they  would  be  wasting  capital  all  the  time.  In  that  case,  then,  they 
would  raise  wages  all  the  more. 

On  the  protectionist  theory  a  leisure  class  of  idle,  rich  people  make 
wages  higher  than  they  would  be  if  the  same  people  should  go  to  work. 
By  the  same  reasoning  women  who  now  consume  without  producing 
would  lower  wages  if  they  should  go  to  work,  and  while  consuming,  as 
they  now  do,  should  compete  in  the  labor  market.  Indeed  this  view  of 
the  matter  is  very  often  taken,  and  perhaps  the  popular  ^'iew  is  that 
the  rich  make  wages  high,  if  they  not  only  keep  out  of  the  labor  market, 
but  also  consume  luxuriously,  and  do  not  save  anything. 

On  the  protectionist  argument  paupers  living  in  an  almshouse  raise 
wages  as  compared  with  what  wages  would  be  if  the  same  persons 
should  no  longer  consume  unproductively,  but  should  come  out  and 
compete  in  the  labor  market  while  consuming  as  before.  On  the  same 
argument  paupers  who  produce  something,  though  less  than  they  con- 
sume, lower  wages  compared  with  what  Avould  be  the  case  if  the  paupers 
did  nothing ;  still  more  as  compared  with  the  case  in  which  the  paupers 
should  destroy. 


8  TARIFF    COMMISSION.  [w.  g.  sumner. 

On  the  protectionist  argument,  convicts  in  the  State  prison  raise 
wages  by  consuming  the  i)rodnct  of  taxation  in  idleness,  and  lower 
wages  if  they  go  to  work,  and  while  consuming  as  before,  produce 
something,  because  in  the  latter  case  they  compete  in  the  labor  market. 
In  fact,  criminals  out  of  State  prison  would  satisfy  the  protectionist  rea- 
soning still  better.  They  always  destroy  far  more  than  they  produce,  and 
they  do  not  compete  with  laborers.  They  would,  therefore,  raise  wages  by 
their  operations.  It  would  be  a  limitation  of  their  beneficent  action  to 
put  them  in  jjrison  as  consumers  in  idleness,  still  more  so  to  set  them 
to  work  at  a  useful  industry. 

On  the  protectionist  view  of  the  matter  the  trade-unionists  are  right 
when  they  adopt  wasteful  i>rocesses,  jiractice  shiftlessness  and  neglect, 
study  not  to  be  skillful  or  effective,  and  try  to  make  work,  as  thej'  call 
it,  believing  that  they  thus  raise  wages.  The  protectionist  and  the 
trades-unionist  both  mijitake  toil  for  wages.  They  think  that  when  they 
increase  the  difliculties  which  intervene  between  us  men  and  goods 
they  increase  wages,  and  that  to  make  goods  abundant  is  to  lower 
wages. 

On  the  protectionist  theory  those  men  in  the  riot  at  Pittsburgh,  who 
exulted  in  the  destruction  of  the  city  because  they  thought  that  it 
would  make  work,  which  they  confused  with  making  wages,  were  right 
from  their  point  of  view,  ISTo  man  wants  work;  that  is,  toil,  or  irksome 
exertion.  Least  of  all  does  the  man  who  has  no  capital  want  toil.  He 
supplies  toil.  He  cannot  supply  and  demand  the  same  thing.  He  de- 
mands capital  on  which  to  live.  When  capital  is  destroyed  and  toil  is 
necessary  to  reproduce  it,  the  ratio  in  which  toil  must  be  given  for  cap- 
ital is  rendered  more  unfavorable  to  the  laborer;  that  is,  wages  fall. 
If  they  do  not  fall  on  the  spot  where  the  destruction  took  place  they 
must  fall  elsewhere  whence  the  capital  is  drawn  to  replace  the  capital 
destroyed.  If  Pittsburgh  had  to  be  rebuilt  other  cities  could  be  built 
up  just  so  much  less.  If  Pittsburgh  had  not  been  burned  up  the  capi- 
tal which  went  to  replace  it  would  have  been  used  to  employ  laborers 
in  adding  so  much  more  to  the  comfort  and  possessions  of  the  country. 
The  country  is  i>oorer  for  all  time  by  the  capital  there  destroyed,  with 
all  its  accumulations.  Just  so  every  year  that  this  nation,  on  account 
of  the  protective  system,  attains  to  the  possession  of  a  less  amount  of 
goods  than  it  could  have  obtained  under  freedom,  the  effect  is  the  same 
as  if  we  had  produced  a  city  and  had  seen  it  burn  up;  and  anybody 
who  believes  that  the  protective  taxes  raise  wages  must  believe  that 
to  burn  up  cities  raises  wages.  All  these  notions  are  miserable  falla- 
cies, which  sin  against  the  first  elements  of  common  sense.  He  who 
believes  that  the  way  to  raise  wages  is  to  hinder  people  from  getting  at 
things  easily  and  cheaply  or  to  refrain  from  the  most  profitable  modes 
of  obtaining  goods,  must  believe  that  workmen  riiise  wages  when  they 
sto])  working  and  go  out  on  strikes,  and  lower  wages  when  they  go  to 
work  again.  Trades-unionism  and  protectionism  are  falsehoods.  The 
way  of  prosperity  for  human  society  is  by  industry,  economy,  thrift, 
skill,  energy,  painstaking,  excellence,  liberty,  abundance,  and  not  by 
some  crafty  and  artificial  devices  to  produce  scarcity  and  bad  work. 
The  protectionist  system  requires  a  new  set  of  proxerbs  which  have 
never  yet  found  their  way  into  any  poi)ular  philosoi)hy,  such  as  these: 
Want  makes  wealth;  destroy  and  ])r<Ksper;  taxes  are  wages;  to  have 
much  produce  little;  blessed  are  the  bad  workman  and  the  foolish  cap- 
italist, for  they  shall  get  abundance. 

Let  us  now  look  at  the  other  dogma:  High  wages  make  protective 
taxes  necessary.     It  is  the  very  opposite  of  the  truth.     If  wages  are 


W.G.SUMNER.]  PROTECTIVE    TAXES    AND    WAGES.  \) 

high,  that  is  the  reason  why  no  protective  taxes  are  needed,  even  if  they 
might  be  in  some  other  case.  In  Germany  the  protectionists  generally 
allege  that  lower  wages  in  Germany  than  in  England  are  a  proof  that 
Germany  is  indnstrially  inferior  and  needs  protection  against  England. 
The  protectionist  argument  never  flags  on  account  of  any  little  variation 
in  the  facts. 

In  the  arguments  under  this  head  of  the  subject  it  is  constantly  as- 
sumed that  wages  are  the  controlling  condition  In  production,  orthat  there 
is  some  direct  connection  between  the  wages  paid  and  the  value  of  the 
product  or  the  profits  of  the  capitalist  employer.  These  assumptions 
are  false.  Suppose  that  an  individual  comes  forward  and  claims  that 
he  cannot  compete  because  he  pays  higher  wages  than  a  foreign  pro- 
ducer. When  has  any  examiuation  ever  been  made  to  find  out  whether 
such  person  has  an  adequate  capital,  or  has  a  competent  knowledge  of 
the  business,  or  diligently  attends  to  his  business,  or  has  located  his  es- 
tablishment wisely,  or  has  organized  his  business  economically,  or  has 
boughthis  raw  material  judiciously,  or  has  kept  up  with  improvements  in 
machinery,  or  has  not  speculated  with  his  product  unsuccessfully,  or  has 
not  violated  some  one  of  the  other  conditions  of  success  ?  The  wages 
paid  are  but  one,  and  often  one  of  the  least  important  conditions  of  i)ro- 
duction.  If  it  is  alleged,  as  it  constantly  is  in  this  controversy,  in  a 
sweeping  way,  that  American  industries  need  protection  because  Ameri- 
can wages  are  higher  than  foreign  wages,  it  is  a  case  of  joining  a  very 
wide  inference  to  very  inadequate  premises.  What  are  the  comparative 
conditions  of  industry  in  America  and  elsewhere  as  regards  convenience 
and  cost  of  raw  materials,  quality  and  cost  of  machinery,  rent  of  land 
used,  character  of  the  climate  as  affecting  the  requirements  of  various 
industries,  national  character  as  respects  industry,  diligence,  sobriety, 
intelligence,  &c.,  of  labors,  distance  from  the  market  or  convenience  and 
cost  of  transportation,  convenience  and  cost  of  natural  agents  (coal  or 
water),  taxes  and  tax  system,  the  security  afforded  by  the  excellence  or 
otherwise  of  the  government,  &c. "?  Surely  it  is  plain  that  these  things 
are  the  conditions  of  production  and  tlie  comparative  money  rates  of 
wages,  taken  apart  from  the  ])urchasing  power  of  money,  or  the  effi- 
ciency of  labor,  to  say  nothing  of  all  the  other  conditions  enumerated, 
are  by  no  means  a  criterion  for  a  decision  whether  an  industry  can  be 
carried  on  successfully  or  not.  The  lists  of  comparative  wages  which 
have  been  made,  and  which  are  relied  upon  by  x>rotectionists,  and  are 
often  accepted  bj'  free-traders  as  pertinent  to  the  issue,  and  perhaps  as 
decisive  of  it,  have  no  value  at  all  for  the  purpose.  Tbe  employer  al- 
leges that  he  can  make  no  profits  because  he  pays  high  wages.  He  as- 
sumes, apparently,  that  wages  and  profits  displace  each  other.  It  is  cer- 
tain that  they  do  nothing  of  the  kind.  There  is  no  ascertainable  relation 
between  wages  and  profits.  Wages  are  paid  out  of  the  capital  during 
the  period  of  production.  The  employer  tries  to  keep  wages  down,  just 
as  he  tries  to  keep  down  cost  and  waste  of  raw  material  or  wear  of  ma- 
chinery, because  he  wants  to  economize  on  his  outlay.  He,  of  course, 
tries  to  minimize  every  outlay,  because  that  is  the  road  to  success  in 
the  competition  of  the  market,  and  to  maximum  profits.  The  price  of 
his  product  when  he  gets  it  done  will  be  determined  by  supply  and  de- 
mand on  the  market.  He  must  replace  his  capital  and  then  he  will  find 
out  what  profit  he  has.  i^o  law  whatever  can  be  established  between 
this  profit  and  the  wages  which  were  paid  to  the  men  while  they  were 
making  the  article.  Profits  and  wages  nmy  both  be  high  or  both  low  at 
the  same  time,  or  one  maybe  higl;  and  the  other  low.     The  fact  is,  that 


10  TARIFF    COMMISSION.  [w.g.  sumkek. 

instead  of  one  being-  displaced  by  the  other  they  most  always  go  to  - 
gether,  both  high  or  both  low  at  the  same  time. 

It  is  much  more  to  the  point  to  notice  that  profits  are  higher  in  this 
country  than  in  Europe.  We  ought  not  to  take  too  low  views  of  human 
nature,  but  when  an  employer  pretends  to  bull  wages,  we  shall  not  be- 
lieve him  without  examination.  When  we  notice  that  profits  are  high 
in  this  country  we  can  understand  the  applicants  for  tariff  favors,  with- 
out assuming  any  disinterestedness.  No  capitalist  will  go  into  a  busi- 
ness which  gives  less  profit  than  some  other  which  is  open  to  him.  The 
American  i^roducer  does  not  want  to  put  up  with  the  rates  of  profit 
which  his  European  competitor  is  satisfied  with.  He  wants  the  rate 
which  he  could  get  if  he  went  into  one  of  the  industries  which  are 
favored  by  nature  in  this  country.  Instead  of  going  where  he  could 
get  it  on  a  natural  basis,  he  wants  the  law  to  tax  his  fellow-citizens  to 
give  it  to  him.  The  talk  about  wages  is  all  for  effect.  It  is  only  so 
much  smoke  and  noise  imported  into  the  contest  to  obscure  the  issue. 
It  has  had  no  little  effect,  because  no  one  has  taken  the  trouble  to  ex- 
pose it  in  detail.  The  competitor  whom  we  fear  most  is  England,  in 
which  country  wages  are  higher  than  anywhere  else  in  Europe.  How 
does  England  pay  high  wages  and  beat  all  the  others,  if  high  wages  are 
the  controlling  consideration "?  And  if  she  pays  higher  w^  ages  than  the 
continental  countries  and  beats  them  all,  because  other  considerations 
come  in,  why  may  we  not  pay  higher  wages  than  she  and  beat  her,  at 
least  in  our  home  market,  because  other  considerations  come  in  ?  The 
nearest  approach  t<)  pauper  laborers  in  Europe  are  agricultural  labor- 
ers. Our  farmers  send  their  products,  raised  by  men  remunerated  at 
American  rates,  and  i)ay  transportation,  and  beat  the  pauper  laborers 
in  their  own  home  market.  How  can  this  be  done  if  the  criterion  of 
possible  competition  is  the  comparative  rate  of  wages  ? 

If  it  is  said  that  we  cannot  compete,  what  is  meant  f  These  phrases 
are  allowed  to  pass  without  due  examination.  I  cannot  compete  with 
my  inferiors  or  with  my  sui)eriors.  I  cannot  compete  with  an  Irish 
laborer  at  digging  a  ditch,  and  I  could  not  compete  with  the  late  Mr. 
Scott  in  running  a  railroad.  Could  any  taxes  enable  me  to  run  a  rail- 
road as  Mr.  Scott  did,  and  to  earn  such  remuneration  as  he  earned? 
Certainly  not.  No  taxes  can  possibly  enable  a  man  to  compete  with  a 
superior.  Could  any  taxes  enable  me  to  compete  with  an  Irish  laborer  at 
digging  a  ditch  ?  Indeed  they  could.  They  might  interfere  between  me 
and  the  laborer  and  prevent  me  from  getting  his  services,  and  I  might  be 
forced  to  dig  my  own  ditch,  turning  away  from  other  and  better  paid 
occupations  to  give  my  time  to  an  inferior  occupation.  That  would  im- 
poverish me.  Such  is  the  only  way  in  which  protective  taxes  can  make 
competition  x)ossible.  They  drive  us  down  to  compete  with  those  who 
are  far  worse  off  than  we  instead  of  allowing  us  the  full  use  of  our  natural 
advantages. 

If  we  have  high  wages,  then  they  are  a  proof  of  industrial  superiority. 
They  prove  that  there  are  some  lines  of  industry  open  to  us,  as  a  nation, 
in  which  great  returns  for  both  labor  and  capital  may  be  obtained.  To 
argue  from  high  wages  that  we  need  i)rotection,  is  like  arguing  that  a 
man  needs  charity  because  ho  is  rich,  or  needs  help  because  he  is  strong. 

A  true  analysis  of  the  facts  therefore  shows  us  that  protective  taxes 
lower  wages,  and  that  high  wages  are  not  a  reason  why  i)rotective  taxes 
are  necessary.  We  get  tlie  remuneration  of  labor  by  using  our  natural 
advantages.  The  remuneration  of  labor  is  higii  because  the  advantages 
are  great.  It  will  be  highest  if  the  laborer  is  let  alone  to  use  the  ad- 
vantages Avithoutany  restraint  or  interference.     If  we  get  a  high  remu- 


w.  c.  suM.NF.u.]  PROTECTIVE    TAXES    AND    WAGES.  11 

ueratiou  by  the  use  of  our  advantages,  our  strength  in  competition  will 
come  from  the  very  advantages  of  nature  which  gave  the  high  rewards  of 
industry.  Thus  every  aspect  of  the  matter  is  consistent  and  straight- 
forward, clear  and  natural.  The  more  we  study  the  case  in  all  its  aspects, 
the  more  thoroughly  is  the  free-trade  solution  of  it  confirmed,  for,  instead 
of  entangling  ourselves  in  ridiculous  absurdities,  we  find  that  all  the 
relations  are  simple  and  consistent. 

The  application  of  these  ideas  to  the  matter  in  hand  is  simple  and 
direct;  I  have  spoken  Asholly  as  a  political  economist  whose  business 
it  is  to  study  theoretical  questions.  If  it  is  proper  to  do  anything  about 
wages,  the  right  tiling  to  do  is  to  abolish  all  protective  taxes,  and  that 
will  let  thein  rise  where  they  ought  to  be. 

By  Commissioner  Kenner  : 

Question.  Of  course  you  do  not  object  to  our  receiving  your  communi- 
cation (which  I  will  admit  is  a  very  strong  one,  and  probably  as  forcible 
as  could  be  i)resented)  under  the  well-known  saying  that  "'granting  a 
logician  his  premises  he  can  reach  any  conclusion  he  wishes "f — Answer. 
Yes;  I  object  to  that  very  much. 

Q.  You  object  to  our  taking  your  paper  Avith  that  understanding"?— 
A.  Yes;  I  do,  very  much. 

Q.  Of  course  your  long  residence  in  iSTew  England  has  made  you  fa- 
miliar with  the  soil  and  climate  of  that  section  of  the  country  ? — A.  Yes, 
sir;  I  was  brought  up  there 

Q.  You  recognize  the  fact  that  Xew  England  has  attained  a  high  po- 
sition morally,  intellectually,  and  financially? — A.  Yes,  sir;  it  is  so  un- 
derstood, I  believe. 

Q.  You  recognize  the  fact,  also,  that  the  soil  of  New  England,  in  fer- 
tility and  in  all  other  qualities  which  lead  to  great  productiveness  (I 
mean  in  reference  to  climate,  &c,)  cannot  compare  with  the  prairies  of 
the  West  or  the  savannas  of  the  South  ? — A.  Yes,  sir. 

Q.  Well,  do  you  suppose  that  this  great  eminence  which  New  Eng- 
land has  attained,  in  its  intellectual,  moral,  and  financial  condition,  and 
in  its  immense  accumulation  of  surplus  wealth,  could  have  been  attained 
under  a  system  of  free  trade ;  in  other  words,  if  there  had  been  no  tariff 
from  the  inception  of  the  government  down  to  the  present  day,  do  you 
think  that  Xew  England  could  have  attained  that  eminence  and  those 
qualities  which  constitute  a  great  nation? — A.  It  is  impossible  to  doubt 
it.  It  would  have  been  much  greater  than  it  is  now,  if  there  had  not 
been  any  tariff  at  all.  The  contrary  hypothesis  would  force  you  to  as- 
sume that  the  people  of  Xew  England  had  been  getting  rich  at  the  ex- 
pense of  the  rest  of  the  country,  which  I  do  not  admit. 

Q.  You  admit  that  they  have  got  rich  ?— A.  Yes,  sir. 

Q.  And  you  admit  the  sj'stem  under  which  they  did  get  rich  ? — A. 
Yes,  sir;  they  have  borne  up  against  obstacles. 

Q.  Have  you  visited  the  South  during  the  last  25  years,  or  do  you 
know  enough  of  the  condition  of  the  South  to  answer  such  a  question 
in  regard  to  its  jiresent  condition  ? — A.  I  have  been  in  the  South,  but 
have  not  acquired  any  particular  knowledge  of  that  section. 
*  Q.  You  have  acquired  such  knowledge,  I  suppose,  as  you  would  get 
hy  looking  at  the  landscape  ? — A.  I  was  there  a  few  days  once,  on  polit- 
ical business;  I  did  not  go  into  the  question  of  its  industries  at  all, 

Q.  But  you  must  have  attained  imi)ressions  from  looking  at  the  build- 
ings and  the  landscape  as  presented  to  any  jierson  who  travels  through 
a  country? — A.  I  had  rather  tell  you  just  what  was  the  fact.  I  went 
down  from  Louisville  by  the  Jackson  road  to  Xew  Orleans  and  right 


12  TARIFF    COMMISSION.  [vv.  c  slmner. 

back  again,  on  an  express  train.     So  much  as  a  man  can  see  out  of  a  car 
window  in  the  daytime,  I  saw. 

Q.  Did  you  not  see  a  directly  opposite  state  of  things  from  that  which 
you  have  observed  in  any  of  the  New  England  States? — A.  Yes,  sir; 
considerably. 

Q.  Did  you  not  observe  that  the  houses  were  in  a  dilapidated  condi- 
tion, and  that  the  people  were  comparatively  impoverished? — A.  Yes, 
sir;  that  was  the  general  appearance. 

Q.  And  it  formed  a  great  contrast  to  the  appearance  of  thiugs  in  New 
England?— A.  Yes,  sir. 

Q.  Are  yon  not  aware  that  the  system  which  you  advocate  has  been 
adopted  in  the  South  for  50  years  or  longer? — A.  No  doubt.  When  I 
went  down  there  they  had  just  passed  through  a  terrible  war;  their 
capital  had  been  used  up,  and  they  were  in  the  midst  of  a  most  horrible 
political  muddle. 

Q.  I  am  glad  to  hear  you  admit  the  horrible  politi<'-al  muddle.  .  But 
the  system  which  has  been  adopted  by  the  Southern  people  is  the  one 
which  you  have  been  advocating  here  to-day;  while  the  opposite  sys- 
tem has  been  adopted  by  the  New  England  States,  by  Ohio,  Pennsyl- 
vania, and  the  Middle  and  Western  States.  They  have  taken  advan- 
tage of  this  system  which  you  say  is  all  nonsense — the  sublimest  non- 
sense, utterly  and  ineffably  ridiculous,  and  all  that  sort  of  thing. — A. 
I  prove  that  it  is. 

Q.  And  I  started  out  by  saying  that  if  you  grant  a  logician  his  prem- 
ises he  can  prove  anything. — A.  But  I  do  not  admit  that  in  regard  to 
my  paper.  We  are  not  discussing  logic.  Besides,  I  do  not  think  that 
is  a  good  proposition  in  logic. 

Q.  We  are  not  discussing  logic,  but,  as  a  professor  in  a  college,  you 
cannot  object  to  your  statements  being  tested  logically :  as  a  matter  of 
course  you  cannot  object  to  that? — A.  I  do  not  want  any  logical  dog- 
mas interposed  in  the  matter.  I  have  no  objection  to  a  logical  exami- 
nation of  my  paper. 

Q.  I  understand  perfectly  well.  Our  purpose  is  to  arrive  at  the  truth. 
We  want  to  get  at  facts  which  will  enable  us  to  form  some  system  of 
revenue  which  will  be  of  benefit  to  the  country.  You  appear  before  us 
to  advocate  a  system,  and  I  want  to  get  at  the  bottom  of  that  system 
in  order  to  determine  how  far  it  will  stand  the  test  of  fact  as  well  as  of 
theory.  I  suppose  you  will  admit  that  it  is  the  part  of  wise  statesman- 
ship to  look  at  the  results  of  a  theory  as  well  as  to  look  at  the  theory 
itself  as  expounded  by  a  logician  ? — A.  No  doubt  you  have  to  test  theo- 
ries; everybody  admits  that. 

Q.  Now  we  see  one  section  of  the  country  (and  T  have  taken  the  South 
^s  an  illustration;  I  speak  of  it  witliout  hesitation  because  I  am' a 
Southerner  by  birth,  and  have  lived  in  tlie  South  all  my  life,  so  that  my 
motives  are  not  susceptible  to  being  misinterpreted)  in  a  very  dilapi- 
dated condition.  We  have  turned  our  backs  on  manufactures  of  every 
kind  as  a  rule,  and  have  adopted  the  theory  i)roi)oun(led  by  Mr.  Cal- 
houn and  other  great  men  of  the  South,  that  we  were  tributary  to  the 
North,  and  have  carried  that  theory  into  practice.  The  result  has  been 
that  it  has  placed  the  South  at  the  bottom  of  the  hill,  while  New  Eng- 
land and  the  Middle  and  Western  States,  such  as  Missouri,  Illinois,  In- 
diana, Kentucky,  and  Tennessee,  wliich  have  adoi)ted  tlie  opposite 
theory  from  the  one  adopted  by  the  South,  have  reached,  if  not  the  top 
of  the  hill,  at  leastai)lace  very  far  up  the  slope.  Now,  as  a  commission 
appointed  to  prepare  a  system  of  revenue,  or  to  revise  a  system  which 
has  been  in  existence  for  along  time,  do  you  not  tliink  it  wise  on  our 


w.  G.  suMJfEK.]  PROTECTIVE    TAXES    AND    WAGES.  13 

part  to  look  at  the  results  of  the  two  systems,  instead  of  considering  ex- 
clusively the  theory  of  the  one  system  or  the  other  1 — A.  If  you  are  go- 
ing to  discuss  these  results  which  you  have  alluded  to,  as  shown  by  the 
present  condition  of  the  one  section  or  the  other  of  this  country,  you 
will  have  to  go  into  the  entire  history  of  the  country,  not  simply  on  the 
tariff  question,  but  also  in  regard  to  the  slavery  question,  the  effects  of 
the  civil  war,  and  everything  else  which  has  happened  since  the  adop- 
tion of  the  Federal  Coustitution.  Consequently,  any  deductions  such 
as  you  suggest  taking  into  account,  with  respect  to  Mr.  Calhoun's 
theories  of  free  trade,  and  the  theory  of  protection,  would  certainly  be 
very  fallacious.  It  would  be  necessary  to  go  over  a  great  deal  of 
ground  to  take  the  whole  thing  in.  I  have  spent  some  time  in  the 
study  of  these  questions,  and  could  go  into  that  matter  if  we  had  time. 

Commissioner  Kenner.  No,  I  do  not  care  to  do  that ;  that  is  not  our 
business.  We  are  appointed  to  investigate  the  question  of  revenue. 
If  the  question  of  slavery  was  before  us  1  should  be  happy  to  hear  you 
on  that  subject,  although,  probably,  you  would  not  be  so  happy  to  hear 
me. 

The  Witness.  I  should  like  to  hear  you  on  any  subject. 

Commissioner  Kenner.  If  that  question  was  before  us,  my  views 
would  be  as  plain  and  as  practical,  I  hope,  as  they  may  be  in  regard  to 
any  other  matter. 

The  Witness.  I  gave  the  only  answer  I  could  to  your  question,  that 
the  whole  history  of  the  country  would  have  to  be  gone  into  to  get  at 
the  causes  of  the  results  you  speak  of.  But  if  you  attribute  the  condi- 
tion of  the  South  solely  to  the  effect  of  the  tariff,  you  are  wrong. 

Q.  But,  as  I  have  said,  we  have  been  appointed  to  prepare  a  system 
of  revenue,  and  for  this  purpose  we  are  endeavoring  to  collect  the 
necessary  information.  You  hav^e  suggested  objections  to  the  present 
tariff  system.  You  have  stated  as  facts  certain  things  which  other 
people  deny.  Whether  you  are  right  or  they  are  right  is  a  question 
for  discussion  between  the  two  parties.  But  you  have  not  yet  told  us 
what  system  you  would  recommend  in  the  place  of  the  present  tariff. 
Suppose  the  present  tariff  was  wiped  out,  and  we  were  to  follow  your 
theory  of  letting  labor  seek  its  own  market,  and  letting  the  products 
of  labor  be  sold  where  they  can  be  sold  at  the  highest  price,  regardless 
of  a  tariff  or  any  other  outside  consideration,  what  system  would  you 
advise  us  to  adopt  ? — A.  I  am  not  a  statesman  at  all ;  I  cannot  formu- 
late a  revenue  system  for  the  country.  I  have  never  taken  such  a  mat- 
ter ui^on  me :  it  is  quite  out  of  my  line. 

Q.  Our  purpose  is  to  get  at  the  facts.  I  had  supposed  that  when 
you  condemned  one  system,  you  would  be  prepared  to  offer  another  to 
take  its  place. — A.  I  would  say,  give  them  all  the  free  trade  you  can. 
Eemove  all  protective  taxes  as  fast  as  you  can,  or  make  them  as  low  as 
you  can,  if  you  cannot  abolish  them  altogether.  That  is  all  I  have  to 
say  about  it,  speaking  as  a  political  ecoiiomist.  All  protective  taxes 
are  mischievous,  and  you  should  get  them  out  of  the  way  if  you  can. 
If  anybody  tells  you  that  a  protective  tariff  raises  wages,  I  come  here 
to  tell  you  that  it  does  not,  but  that,  on  tlie  contrary,  it  lowers  wages. 

Q.  I  do  not  think  our  purpose  is  to  tind  out  the  way  either  to  raise 
or  to  lower  wages.  Our  object  is  to  find  out  the  best  system  of 
revenue. — A.  Then  abolish  all  protective  taxes. 

Q.  Without  regard  to  the  $L'r)0,O0O,000  or  $300,000,000,  that  it  is 
necessary  to  raise  for  the  support  of  the  government  ?  What  would 
you  recommend  in  the  place  of  the  present  tariff  system  ? — A.  Y'ou  have 
a  large  '.?umber  of  revenue  taxes,  and  if  you  strike  out  half  of  them  and 


14    '  TARIFF    COMMISSION.  [w.  «.  summer. 

divide  the  rest  by  two  you  would  double  the  revenue,  if  you  want  more 
revenue. 

Q.  Divide  which  taxes  by  two  ? — A.  All  yon  have  got — the  whole 
tariff  system,  the  whole  intricate  import  tariff"  duties  that  we  have. 
Strike  half  of  them  off"  the  list  and  lower  the  rest  to  one  half  of  what 
they  are  now  and  you  will  double  the  revenue. 

Q.  I  thought  you  said  Just  now  that  we  should  abolish  all  revenue 
taxes'? — A.  All  protective  taxes. 

Q.  All  import  duties? — A.  I  never  said  that;  I  said  all  protective 
taxes. 

Q.  I  understood  you  to  say  abolish  all  protective  taxes,  and  I  under- 
stood you  to  mean  by  that  all  import  duties. — A.  Oh,  no;  I  do  not  mean 
that. 

Q.  I  wish  you  would  be  more  explicit  then. — A.  I  am  as  explicit  as 
a  man  can  be. 

Q.  1  thought  you  Considered  all  those  duties  as  protective? — A.  If 
you  had  a  duty  on  tea,  or  on  pepper,  it  would  not  be  a  protective  tax; 
neither  would  a  duty  on  coffee  be  a  x>rotective  tax.  If  you  have  a  duty 
on  wine,  that  might  be  protective.  The  tax  on  sugar  is  largely  a  reve- 
nue tax,  but  it  is  also  a  protective  tax  on  behalf  of  the  Louisiana  sugar 
growers.  If  you  ask  me  what  I  want  done,  I  say  I  want  an  excise  put 
on  Louisiana  sugar  men,  in  order  to  make  them  pay  into  the  Treasury 
an  amount  equal  to  the  protective  tax;  so  that  when  I  buy  sugar  I 
shall  not  pay  any  tax  to  the  sugar  grower  at  all.  I  want  to  pay  taxes 
to  the  United  States  Treasury,  but  not  to  the  iron  man,  the  sugar  man, 
the  woolen  man,  or  any  other  of  my  fellow  citizens. 

Q.  I  did  not  suppose  that  you  proposed  paying  taxes  to  the  United 
States  Government.  I  understood  you  to  be  oi)posed  to  the  present 
tariff  system? — A.  I  oppose  the  protective  system.  Protective  tariffs^ 
are  the  onlj^ones  I  have  discussed.  I  have  not  touched  upon  the  reve- 
nue system  at  all.  The  minute  you  touch  protection  you  touch  what  I 
am  talking  about.  It  is  the  business  of  Congressmen  and  statesmen  to 
provide  for  a  revenue,  not  the  business  of  professors. 

Q.  What  do  you  mean  by  a  protective  tax? — A.  I  mean  a  tax  laid 
for  the  benefit  of  an  industrial  person  in  the  country. 

By  Commissioner  Oliver: 
Q.  You  mean  a  tax  laid  on  any  article  i)roduced  in  this  country? — 
A.  Yes,  sir.    It  may  be  partly  for  revenue,  and  partly  protective. 

By  Commissioner  Kenner  : 

Q.  You  advocate  a  protective  duty  on  articles  not  made  in  this 
country;  and  that  the  duty  should  be  taken  off  all  articles  made  in 
this  country,  agricultural,  mechanical,  and  commercial. 

The  Witness.  Please  repeat  that. 

Commissioner  Kenner.  I  asked  you  to  define  what  you  call  a  pro- 
tective duty,  and  you  sa^^  a  protective  duty  is  a  duty  imposed  on  any 
article  grown  or  manufactured  within  the  United  States. 

The  Witness.  No,  sir;  I  did  not  say  that.  I  said  that  a  protective 
tax  is  one  which  is  paid,  not  into  the  Treasury,  but  to  som<>  industrial 
person  in  the  country.  I  would  not  obje(!T  to  paying  a  tax  on  iron,  for 
instance,  if  the  amount  which  1  paid  would  go  into  the  Treasury;  but  I 
do  object  to  paying  such  a  tax  if  it  goes  into  the  i)Ockets  of  tlie  Pennsyl- 
vania maiuifacturer.  That  is  what  I  am  oitposed  to,  and  nothing  else.. 
Such  a  tax  favors  the  manufa(;turer  in  his  business,  and  is  not  paid 
for  revenue. 


w.  D.  suMNEK.]  PROTECTIVE    TAXES    AND    WAGES.  15 

Q.  Any  duty  which  favors  the  business  of  the  countrj'is  a  protective 
tax  wliich  ought  to  be  abolished;  is  that  what  you  say  ! — A.  Yes;  I  will 
say  that,  if  it  favors  any  particular  business.  It  is  not  the  object  of 
taxes  to  favor  the  business  of  a  country,  not  in  the  least.  .  We  must  be 
on  the  lookout  all  the  time  for  ambiguous  terms  in  this  discussion. 

Q.  There  is  another  question  I  will  ask,  not  because  it  affects  you  par- 
ticularl3',  but  because  it  attects  everybody.  I  am  an  agriculturist  by 
profession,  and  have  been  all  my  life;  1  am  not  a  lawyer;  and  there  is 
one  point  in  this  discussion  wliich  I  do  not  understand.  The  manufact- 
urer appears  before  us  and  seems  to  be  enthusiastic  in  behalf  of  the  in- 
terests of  the  poor  man,  and  tells  us  that  he  wants  a  protective  duty 
because  it  will  jn-otect  the  poor  man  and  enable  him  to  receive  better 
wages.  Now,  on  your  part,  are  we  to  assume  the  same  ground ;  that 
you  want  to  protect  the  poor  man  ? — A.  No,  sir ;  I  do  not  make  any 
such  claim. 

Q.  Who,  then,  do  you  profess  to  plead  for,  or  in  whose  favor  do  you 
make  your  statement  if  it  is  not  in  behalf  of  the  mass  of  the  comuuinity, 
and  of  those  particularly  who  are  not  able  to  help  themselves? — A.  I 
speak  for  those  who  are  now  being  oppressed  and  injured  by  existing- 
legislation.  1  have  stated  the  effect  on  them.  As  to  favoring  anybody, 
or  coming  forward  to  do  anything  more  than  to  help  a  man  stand  on  his 
own  feet  and  look  out  for  himself,  I  have  not  done  it  here,  nor  have  I 
ever  done  it.  I  disclaim  all  that  in  my  paper  and  do  not  make  any  such 
special  plea.  I  think  it  is  the  business  of  demagogues  to  do  that.  It  is 
not  the  business  of  the  government  to  make  wages  high  or  to  favor  the 
poor  laboring  man,  except  to  let  him  do  the  best  he  can  for  himself.  I 
make  a  plea  against  protective  taxes  because  they  keep  these  men  down; 
because  those  who  receive  small  wages  have  to  pay  their  share  of  the 
public  loss  that  the  protective  system  inflicts  on  the  country. 

Q.  As  I  have  said,  our  object  is  to  formulate  a  proi^er  revenue  sys- 
tem ;  that  is  our  duty,  and  if  you  can  suggest  such  a  system  we  shall 
be  glad  to  receive  such  information.  Have  you  done  that  in  your  i)a- 
per '?— A.  No,  sir;  I  have  not.  I  have  only  talked  about  the  relation  of 
protective  taxes  to  wages;  I  have  not  undertaken  to  talk  about  a  rev- 
enue system. 

Commissioner  Boteler.  I  have  listened  with  great  interest  to  your 
paper  and  to  your  answers  to  Commissioner  Kenner.  You  have 
announced  yourself  as  a  political  economist,  as  a  theorist,  and  as  we 
are  practical  men  with  a  practical  object  in  view,  I  should  be  glad,  for 
my  part,  to  have  you  answer  the  question,  in  the  first  place,  whether 
England  is  not  confessedly  more  perfect  in  her  industrial  pursuits,  and 
has  not  made  more  industrial  progress  than  any  other  nation  of  the 
world  f 

The  Witness.   Yes,  sir;  in  some  lines. 

Q.  In  all  lines  of  manufacturing  industry,  I  mean? — A.  No,  sir;  not 
in  all  lines. 

Q.  Well,  except  in  those  manufactures,  .perhaps,  that  require  nicer 
manipulation  with  respect  to  some  minor  matter,  such  as  the  French 
make  a  specialty  of?— A.  The  (rermans  are  ahead  of  them,  I  think. 

Q.  Will  yon  ])lease  tell  me  how  you  can  reconcile  your  theory,  as  an- 
nounced in  your  paper  (which  I  consider  as  very  forcibly  expressed),  with, 
the  fact  of  Kngland's  progress;  to  what  is  her  commercial  pre-eminence 
to  be  attributed  ?— A.  In  the  first  place,  to  the  fact  that  she  had  the 
richest  stores  of  coal  and  iron  that  existed  anywhere  in  the  world. 

Q.  How  did  she  come  to  make  tiiem  valuable;  did  she  not  protect 
her  industries  for  more  than  two  hundred  years? — A.  I  was  wonder- 


16  TARIFF    COMMISSION.  [w.  g.  sumner. 

ing  which  particular  erroneous  view  of  English  history  you  might  have 
in  mind. 

Q.  Beginning  with  the  time  she  introduced  through  the  Flemings  the 
wool  industries  that  have  made  her  so  great,  has  she  not  given  the  most 
rigid  protection  to  all  her  industries  f — A.  Yes,  sir;  for  awhile  she  did, 
very  much  to  the  injury  of  all  her  industries,  and  which  has  set  her  back 
a  century,  perhaps. 

Q.  Inasmuch  as  she  has  commanded  a  great  share  of  the  commerce 
of  the  world  as  an  exporting  nation,  should  we  not  in  some  degree  at- 
tribute her  success  to  her  protective  system  f — A.  Not  at  all.  The  pro- 
tective system  was  never  anything  but  a  great  injury  to  her,  and  there 
is  hardly  a  writer  now  who  does  not  take  that  view. 

Q.  To  what  is  her  great  prosperity  attributable,  then  ? — A.  To  the 
extraordinary  natural  advantages  which  she  possessed,  especially  in 
having  a  great  store  of  coal  and  iron  available  and  close  to  each  other, 
and  to  the  extraordinary  energy  and  industry  of  her  population.  When 
you  consider  these  things  you  get  at  the  secret  of  her  success. 

Q.  We  have  as  many  natural  advantages  and  resources  as  any  coun- 
try in  the  world.  Do  you  think  we  should  have  attained  any  great  de- 
gree of  eminence  in  the  production  of  those  manufactured  articles  that 
have  made  us  important  in  the  world's  history,  if  we  had  been  kept  in 
subjection  to  England  and  received  our  supplies  from  the  old  country 
instead  of  improving  our  natural  advantages  "? — A.  The  colonial  system 
was  nothing  in  the  world  but  a  protective  system. 

Q.  It  was  a  protective  system  to  England,  but  not  to  us.  It  did  not 
encourage  manufactures  here;  on  the  contrary  it  restricted  them.  So 
far  as  the  protective  system  existed  in  the  old  country  it  had  no  appli- 
cation to  our  country  ? — A.  Yes,  it  did.  It  was  exactly  the  same  as  the 
levying  of  taxes  on  the  Western  farmers  to-day  for  the  benefit  of  the 
Eastern  manufacturers — identically  the  same.  The  application  of  the 
colonial  system  of  Great  Britain  to  the  colonies  did  not  differ  by  a  hair 
from  the  protective  system  of  to-day.  I  am  a  i^retty  careful  student 
of  all  these  matters,  and  I  think  I  speak  with  all  the  facts  behind  me. 
If  you  gentlemen  would  learn  the  theory  of  the  matter — 

Commissioner  Boteler.  We  are  practical  men,  and  want  only  facts. 

The  Witness.  I  suppose  you  understand  that  a  man  who  speaks 
where  he  knows  his  reputation  is  at  stake  has  to  have  his  proofs  behind 
him.  The  limitation  on  the  industries  of  these  colonies  was  a  sacrifice 
of  their  interests  to  the  interests  of  Great  Britain  ;  and  the  protective 
system  to-day  as  it  exists  in  the  United  States  is  a  sacrifice  of  the  inter- 
ests of  the  Western  farmer  to  the  interests  of  the  Eastern  manufacturer. 
That  is  where  the  peril  is.  You  can  studj^  it  as  closely  as  you  like  and 
look  into  the  matter  as  far  as  you  can,  but  you  cannot  get  away  from 
that. 

Commissioner  Boteler.  We  have  traveled  many  thousand  miles 
during  the  last  few  weeks,  searching  for  facts,  in  the  humble  hope  that 
we  might  be  able  to  send  to  Congress  a  record  that  would  be  consid- 
ered as  a  mirror  of  tlie  i)nl)lic  sentiment  of  the  country,  and  we  have 
never  yet  found  in  the  neighborhood  of  any  manufactiuing  town  wliere 
the  fanner  finds  a  ready  market  for  his  perishable  products,  one  single 
person  who  did  not  rejoice  in  the  establishment  of  such  manufactories 
and  feel  that  the  greatest  encouragement  tliat  could  be  given  to  the 
farming  community  was  to  vary  the  industries  of  his  region  of  country 
and  develop  a  market  for  his  products. 

The  Witness.  That  is  the  famous  truck-farm  argument. 

Commissioner  Boteleb.  Still,  I  am  happy  to  tell  you  that  we  find  a 


w.G.  SUMMER.]  PROTECTIVE    TAXES    AND    WAGES.  17 

great  many  of  those  trnck-farins  springing,'  up  in  a  section  of  country 
wliich  has 'heretofore  neglected  uiaunfactnres.  AVe  tind  a  great  change 
of  public  sentiment  in  those  localities.  While  we  may  find  free-trade 
theories  obtaining  in  New  England,  emanating  fi"om  the  colleges  ot  Mas- 
sachusetts and  Connecticut,  we  were  glad  to  tind  that  the  ])eople  are  a 
long  way  ahead  of  the  politicians  in  the  South,  and  are  bringing  these 
matters  home  practically,  and  applying  them  to  their  own  business,  and 
are  proclaiming  themselves  as  earnestly  and  houestly  in  favor  of  a  pro- 
tective tariff. 

The  Witness.  I  know  these  fallacies  are  very  strong,  indeed,  and  if 
a  man  gets  them  into  his  head  it  takes  a  long  time  before  he  can  get 
them  out. 

The  President.  Whatever  difference  of  opinion  may  exist  between 
Professor  Sumner  and  myself,  he  has  stated  his  case  so  clearly  and  with 
such  perfect  distinctness  that  no  question  of  mine  could  bring  out  his 
views  more  comidetely  ;  and  as  I  do  uot  regard  it  as  our  province  to 
talk,  but  simply  to  listen,  I  do  not  desire  to  put  any  questions  to  him. 

By  Commissioner  McMahon  : 

Q.  I  understood  Professor  Sumner  to  rei>ly,  in  answer  to  a  question, 
that  a  tariff"  for  revenue  would  necessarily  be,  in  some  degree,  a  protect- 
ive tariff".  [To  tlie  witness :]  Do  I  state  your  position  correctly  ?  —  A.  Xo, 
sir.  Revenue  and  i)rotection  are  entirely  exclusive  of  each  other,  and 
never  can  overlai)  one  another  at  all.  The  minute  you  touch  protection 
you  i)revent  revenue,  or,  to  put  it  in  a  simpler  form,  if  I  buy  a  ton  of 
im])orted  iron,  it  comes  though  the  custom-house  and  I  pay  an  import 
tax  to  the  government  for  it.  On  the  other  hand,  if  I  buy  the  iron  in 
this  country  I  pay  an  equivalent  tax  to  the  iron  producer  here,  but  do 
uot  pay  anything  into  the  United  States  Treasury. 

Q.  ^understood  that  part  of  your  answer,  but  there  was  another  sub- 
division of  it  whicli  1  did  not  understand.  Do  you  mean  to  say  that 
where  a  tariff  is  placed  upon  an  article  that  is  not  produced  or  manu- 
factured in  the  United  States  (such  as  tea  and  coffee,  for  example),  there 
can  be  no  protection  ? — A.  ]S^o,  sir  ;  no  protection  on  that. 

Q.  But  whenever  an  import  tax  is  placed  upon  an  article  which  is 
produced  in  the  United  States,  that  then  it  is  protection  ?— A.  Yes,  sir; 
unless  it  is  oft'set  by  an  excise,  as  in  the  case  of  tobacco,  wine,  and 
cigars. 

Q.  Then  I  understand  that  your  theory  results  in  this:  that  if  an 
article  is  produced  or  manufactured  in  the  United  States  the  producer 
or  manufacturer  of  that  article  is  protected  to  the  extent  of  that  tax 
unless  that  article  is  offset  by  an  internal-revenue  tax  or  excise?  — A. 
Yes,  sir. 

Q.  Then  I  understand  your  second  proposition  to  be  that  the  agricul- 
turists of  the  country— the  farmers— have  to  pay  this  protective  tax  to 
the  manufacturers  ? — A.  Yes,  sir. 

Q.  Do  the  manufacturers  have  to  pay  any  protective  tax  to  the 
farmer?  — A.  No,  sir;  they  pay  to  each  other,  all  round,  but  not  to  the 
farmer. 

Q.  You  say  that  the  agriculturist  pays  a  tax  to  the  manufacturer 
whenever  he  buys  a  manufactured  article  ?— A.  Yes,  sir. 

Q.  But  when  the  njanufacturer  buys  a  produced  article  which  is  taxed 
he  does  not  pay  anything  to  the  farmer  ?  — A.  On  the  agricultural  pro- 
duct ?  -No,  unless  you  call  sugar  an  agricultural  product  (which,  of  course, 
it  is),  or  hemp,  but  not  on  wheat. 

Q.  Why  not  on  wiieat  ?— A.  Because  there  is  a  tax  on  wheat  in  the 

2  SU 


18  TARIFF    COMMLSSIOX.  [w.  g.  slmxer. 

tariff.  Of  course  it  is  ineffective,  because  the  producers  of  tin's  country 
are  exporters.  I  understand,  however,  they  have  been  jjetting  wheat 
from  Manitoba  lately,  and  they  have  had  to  pay  this  tax. 

Q.  Then  does  not  the  manufacturer  pay  tliat  tax  1'  — A.  The  mill-owner 
pays  that,  and  then  it  comes  to  the  maiuifacturer,  who  consumes  it. 
But  when  the  wheat  comes  from  Manitoba  to  this  country,  where  the 
production  of  wheat  is  oOO,0(>0,()(K)  bushels,  although  technically  it  is  a 
protective  tariff',  it  does  not  amount  to  much. 

Q.  It  theoretically  exists  in  the  other  case.  Suppose  we  do  not  im- 
port certain  articles  of  manufacture,  still  we  are  i)ayiug-  the  tax  on  them 
under  your  theory.  The  agriculturist  is  paying  that  tax  to  the  nmuu- 
facturer,  although  there  is  no  importation  of  those  articles  ? — A.  There 
you  would  have  to  take  each  fact  by  itself.  It  would  be  a  matter  ot 
statistical  inquiry  to  see  how  mucJi  there  was  imported  and  where  it 
goes.  You  could  not  generalize  upon  that.  Take  this  matter  of  wheat 
imported  from  Manitoba,  and  that  is  a  protective  tax  for  the  agricultur- 
ist right  along  there  on  the  border. 

Q.  Here  are  some  generally  conceded  facts,  I  believe.  We  do  not  im- 
port any  beef  or  pork.  We  do  imi)ort  ham  and  bacon.  We  imi)ort  a 
consideralde  amonut  of  foreign  ham  because  it  is  supposed  to  be  l)etter 
iu  some  respects  than  ours.  Is  not  the  duty  on  those  articles  a  tax  on 
the  manufacturer?  We  also  have  imported  i)Otatoes  and  other  vegeta- 
bles of  late,  although  we  raise  them  in  this  country;  is  not  the  duty  on 
them  a  tax  on  the  manufacturer  ?— A.  Yes,  sir;  that  would  be  like  sugar, 
and  there  is  unquestionably  a  protective  tax  ou  rice— a  very  unjust  one. 
There  are,  of  course,  a  number  of  agricultural  products  on  the  tariff 
list. 

Q.  Au<l  a  considerable  importation  of  them  ? — A.  There  are  importa- 
tions under  several  heads  unquestionably,  and  it  makes  it  api)ear  to  the 
agriculturist  as  though  he  was  getting  something  back  once  in  a  while; 
but  he  i)ays  $100  and  gets  one  cent  in  return. 

Q.  We  have  developed,  iu  the  course  of  our  investigations,  the  fact 
that  we  have  imported  for  some  years  more  barley  than  we  have  ex- 
ported ? — A.  Yes,  sir;  a  great  deal  of  barley  has  come  in  from  Canada. 

Q.  Was  not  that  a  large  tax  on  the  manufacturei'  ? — A.  No  doubt  that 
would  be  a  set-back  towards  the  agriculturist,  of  that  particular  article. 

Commissioner  McMahon.  That  is  all  I  desire  to  ask.  You  had  spoken 
particularly  of  the  agriculturist  as  alone  paying  the  tax. 

The  Witness.  The  agricultural  interest  of  this  country  bears  the 
expenditure  that  is  involved  by  the  tariff  iu  regard  to  manufactures. 
You  cannot  get  something  out  of  nothing.  If  you  get  a  cent  for  a 
manufacture,  by  means  of  the  tariff,  that  you  could  get  in  no  other 
way,  it  has  to  come  out  of  somebody,  and  in  the  end  it  is  the  agricultur- 
ist who  pays  it,  as  he  is  engaged  iu  a  fundanu*ntal  industry.  He  is 
strong  and  inde))cndent,  and  he  has  got  to  i)ay  it  all.  As  to  the  manu- 
facturers themselves,  they  are  all  the  time  scalinng  one  another,  and, 
therefore,  I  do  not  believe  they  make  anything  out  of  it.  I  believe  it  is 
all  a  great  folly,  from  the  standard  of  the  manufacturer.  If  all  the 
manufacturers  of  this  country  could  be  droi)])ed  right  down  on  a  free- 
trade  basis,  with  all  their  sui)pliesfree,  and  tlieir  raw  materials  free,  and 
if  their  workmen  could  buy  their  shoes,  hats,  clothes,  crockery,  fur- 
niture, stoves,  bedding,  and  all  the  rest  of  it,  on  a  free  basis,  they  would 
all  find  themselves  far  better  off  than  they  are  today.  If,  instead  of 
trying  to  scalp  each  other,  they  would  begin  on  a  free-trade  basis  and 
get  down  to  hard  pan  they  would  be  far  better  off,  aiul  there  would  be 


w.  o.sLMXER.j  PROTECTIVE    TAXES    AND    WAGES.  19 

an  immense  saving-  of  waste — the  cost  in  keeping-  np  the  system  as  it 
exists  to  day. 

Commissioner  Kenner.  That  is  the  doctrine  that  has  been  advocated 
in  the  South  for  the  last  fifty  or  sixty  years. 

The  ^YITNESS.  And  I  hope  they  will  stick  to  it. 

Commissioner  Kenner.  They  will  not  stick  to  it;  they  have  seen  the 
folly  of  it. 

The  AViTNESS.  They  are  going  to  begin  to  manufacture  there  to  their 
■very  great  loss. 

Commissioner  Oliver.  To  their  loss,  or  New  England's  loss ! 

The  Witness.  New  England  can  stand  it.  I  do  not  think  it  would 
be  any  loss  to  the  country  if  there  was  no  ^S'ew  England. 

Commissioner  Kenner.  I  agree  with  you  in  that  last  remark  ;  that  it 
would  be  no  loss  to  the  country. 

The  Witness.  And  it  would  be  no  harm  to  the  country  if  there  was 
no  Louisiana. 

Commissioner  Kenner.  Yes;  there  would  be.  I  wish  you  would 
prove  that  proposition.  We  tried  to  leave  the  country  and  you  would 
not  let  us,  and  yet  you  say  it  would  be  no  loss.  That  is  a  nou  sequitur 
wbich  I  do  not  understand. 

The  Witness.  We  should  all  live  here  and  be  happy  and  get  our 
living,  even  if  there  wasn't  any  Xew  England,  any  Louisiana,  or  any 
Pennsylvania,  I  suppose. 

Commissioner  Oliver.  The  Commission  is  composed  of  practical  men, 
and  we  have  been  endeavoring  for  the  last  three  months  to  try  and  learn 
as  much  about  these  matters  as  possible.  We  have  visited  all  sections 
of  the  country  and  have  examined  the  subject  in  all  its  various  forms. 
The  views  of  a  gentleman  of  your  standing',  who  occupies  the  position 
which  you  do  in  one  of  the  largest  and  best-known  institutions  of  learn- 
ing in  the  country,  where  we  send  our  children  to  be  educated,  are  en- 
titled to  respectful  consideration  ;  but  when  you  make  such  very  radical 
Siiggestions  as  you  have  made,  we  want  to  see  how  far  you  can  sub- 
stantiate them. 

The  Witness.  By  all  means. 

().  I  have  only  a  question  or  two  to  ask  you.  I  suppose  you  will 
a<lmit  that  large  numbers  of  Irishmen  come  to  this  country  every  year 
and  are  successful  in  business.  Is  there  a  more  purely  agricultural 
country  in  the  world  than  Ireland  ? — A.  ISTo,  sir. 

Q.  Is  there  a  country  in  the  world,  with  the  same  poi)ulation,  which 
has  fewer  manufactories?  — A.  They  manufacture  but  little  in  Ireland. 

Q.  I  understand  from  your  argument  that  you  are  opposed,  for  ex- 
ample, to  having  help  extended  by  the  government,  directly  or  indi- 
rectly, in  tUe  establishmcdt  of  steel-rail  factories.  You  think  that  iu- 
tlustry  should  have  waited  its  proper  time  of  development  and  not  have 
received  the  benefit  of  a  protective  tax,  or  any  help  in  the  way  of  extra 
l>rices  ? — A.  Y^es. 

Q.  Do  you  think  that  argument  would  apply  to  every  industry,  or  to 
every  institution? — A.  Do  not  let  us  use  the  word  "institution";  let 
us  say  "industry." 

Q.  Yery  well;  we  will  say  industry.  An  institution  may  be  connected 
with  an  industry.  Y^ou  are  connected  with  an  institution  which  has  at- 
tained great  eminence,  aiul  to  which  the  sons  of  our  leading  men  are 
sent  for  instruction.  Do  you  think  your  college  would  have  attained 
that  position  but  for  a  protective  tax,  as  it  might  be  called  ?  I  mean 
tbe  benefit  it  has  received  in  the  way  of  legacies  left  to  it  by  rich  men  at 
different  times. 


20  TARIFF    COMMISSION.  [w.  g.slmnbk. 

The  Witness.  Is  that  a  protective  tax  ? 

Comniissiouer  Oliver.  I  do  not  know.  I  just  ask  you  the  plain  (jues- 
tiou  whether  you  woukl  have  attained  the  position  which  you  have  at- 
tained as  an  industry,  without  such  assistance  ? 

The  Witness.  We  are  not  an  industry.  We  are  sinking  capital  all 
the  time. 

Conmiissiouer  Oliver.  I  know  you  are,  and  that  is  the  reason  why 
I  ask  you  the  (luestion. 

The  Witness.  Certainly,  we  have  a  small  endowment,  l)ut  it  is  very 
insignificant,  and  we  really  earn  what  we  get.  The  endowments  of  Yale 
College  do  not  amount  to  more  than  fixed  capital,  and  we  have  to  earn 
all  we  get;  if  we  did  not  we  should  soon  stop.  But  still,  admitting  that 
an  institution  may  be  well  endowed,  it  would  not  have  any  comparison 
with  a  protective  tax  or  anythiug  of  that  sort,  any  more  than  an  endow- 
ment to  an  insane  asylum  would. 

Q.  Would  it  ever  be  able  to  stand  on  its  own  footing,  without  such 
extra  help  ? — A.  It  does  now,  by  earning  what  it  si)ends.  But,  of  course, 
no  educational  institution  in  the  world  could  support  itself  unless  it  was 
a  private  school. 

Commissioner  Oliver.  I  was  trying  simply  to  call  your  attention  to 
the  fact  that  while  it  is  necessary  to  have  colleges,  yet  they  need  pro- 
tection. 

The  Witness.  No,  sir.  In  a  sense,  it  was  not  necessary  to  have  them 
here ;  they  made  themselves.  I  cannot  admit  that  they  have  anything 
at  all  to  do  with  the  protective  theory  we  are  talking  about.  I  cannot 
see  the  slightest  or  remotest  connection. 

By  Commissioner  McMahon  : 

Q.  I  understand  you  to  say  that  you  do  not  believe  in  favoring  any 
one  person,  or  class  of  persons,  at  the  expense  of  any  other. — A.  No; 
not  at  all. 

Q.  Then,  inasmuch  as  the  present  tariff  admits  free  of  duty  for  schools 
and  institutions  of  learning,  like  the  one  you  are  connected  with,  many 
articles,  such  as  books,  maps,  charts,  i)hilosophical  and  scientific  api)a- 
ratus,  and  chemical  apparatus,  by  special  exemption,  you  would  be  in 
fa \' or  of  an  imjtosition  of  a  duty  on  all  such  articles? — A.  Not  at  all; 
that  only  means  that  Congress  has  relieved  the  great  institutions  of  the 
country  of  a  little  bit  of  the  iniquity  involved  in  this  system.  They 
have  not  relieved  me  of  it  personally.  I  have  a  great  ])ersonal  griev- 
ance in  regard  to  books.  I  am  a  })Oor  man,  living  on  a  small  salary, 
and  working  hard  for  it.  I  want  all  the  books  I  can  get  froui  my  toil ; 
but  when  I  go  to  buy  them  I  find  the  law  of  my  country  has  got  in  my 
way  and  says  that  I  cannot  have  those  books  until  I  pay  an  extra  price 
for  tliem,  which  is  not  necessary.  1  ought  to  be  able  to  get  all  the  books 
I  need  on  the  business  basis  of  supply  and  demand,  at  a  certain  i)rice ; 
but  the  law  says  I  must  spend  a  part  of  my  snudl  salary  in  order  tluit 
certain  great  American  i)ublishers  shall  be  protected. 

Q.  Do  you  think  it  is  fair,  then,  for  such  an  institution,  which  pays 
you  so  snuill  a  salary,  to  get  these  articles  in  free  of  duty  ' — A.  I  am 
giad  that  they  can  get  out  of  ]»aying  it;  that  sonu'body  can  get  out  of 
paying  it.  J  do  not  want  all  the  world  crushed  by  such  inicpiity,  be- 
cause I  am  exempted  trom  it.  I  am  glad  if  there  is  any  let  uj)  on  it,  and 
1  wish  there  was  more. 

By  Commissioner  Oliver  : 
Q.  Your  argument,  at  the  outset,  was  that  protection  does  not  benefit 
the  laborer. — A.  That  pr(»tection  lowers  wages. 


w.G.sLMXEK.l  PROTECTIVE    TAXES    AND    WAGES.  21 

Q.  Now  I  will  take  an  illustration  on  tbat  point,  whioli  lias  occnrred 
to  me.  The  material  to  make  a  Ion  of  pig  iron  within  50  miles  of  this 
citv  is  not  worth  over  50  cents  or  $1  a  ton— I  nvean  the  ore,  coal,  and 
lim'estone  in  the  hill.  Everything  else  necessary  to  make  that  ton  of 
pig  iron  is  the  labor,  is  it  nof?— A.  Very  likely;  I  do  not  know  the  de- 
tails of  the  industry ;  but  I  dare  say  it  is. 

Q.  The  cost  is  in  the  labor  and  transportation,  and  transportation  is 
labor.  The  price  of  a  ton  of  pig  iron  of  equal  quality  in  England  to- 
dav  would  be  about  $11  or  $12  a  ton,  while  the  price  here  would  be 
about  $22  to  $23  a  ton.  Kow,  how  can  you  maintain  your  argument, 
when  the  same  quantity  and  amount  of  labor  in  Eastern  Pennsylvania 
is  worth  $22,  and  in  the  Cleveland  district  in  England  it  is  only  worth 
^11,  one  under  free  trade  and  the  other  under  protection? — A.  That  is 
exactly  what  is  wrong  about  it.  It  does  not  make  any  difference  what 
the  wages  are  over  there. 

Q.  There  the  laborer  gets  50  cents  a  day,  and  here  lie  gets  $1.25  a 
<Jayf — A.  That  does  not  make  any  difference. 

Q.  It  makes  a  difference  in  his  style  of  living,  and  a  difference  in  the 
condition  of  the  man's  ftimily  who' receives  $1.25  a  day  instead  of  50 
cents  a  day,  doesn't  it  ? — A.  Not  at  all ;  the  only  difference  is  whether 
he  can  make  $1.25  in  making  iron  easier  than  he  can  in  tilling  the  land. 
You  cannot  cut  him  down  to  50  cents  a  day  wages,  because  the  laborer 
in  Europe  receives  that ;  or  to  10  cents  a  day  wages,  because  the 
laborer  in  China  receives  that.  You  cannot  get  the  American  laborer 
down  below  the  American  rate.  The  iron  manufacturer  wants  pro- 
tection because  he  cannot  get  the  American  laborer  to  work  below  the 
American  rate,  and  he  will  not  work  in  iron  unless  he  can  do  better 
than  in  something  else.  Because  a  man  gets  50  cents  a  day  in  England 
for  doing  that  work  does  not  affect  the  case. 

Q.  Is  not  that  the  reason  why  the  laborers  are  leaving  Ireland,  Ger- 
many, and  other  countries,  and  coming  here  ? — A.  Certainly;  they  say, 
"  We  will  go  to  America  and  make  iron  and  get  as  good  wages  as  if  we 
were  tilling  the  ground."  But  it  does  not  come  out  of  what  they 
make  ;  they  do  not  produce  it.  It  comes  out  of  me  and  the  othei*  con- 
sumers ;  and  that  is  what  we  are  growling  about. 
By  Commissioner  McMahon  : 

Q.  They  would  not  come  to  this  country  except  for  the  difference  in 
wages,  would  they  ? — A.  They  would  if  they  wanted  to.  They  will 
come  if  they  can  find  profit  in  it ;  if  not,  they  will  stay  at  home.  They 
are  coming  fast  enough  now,  whether  they  find  profit  in  it  or  not.  Let 
us  stand  off"  and  let  them  do  as  they  like,  if  they  are  not  living  off  of  us. 
If  they  are  to  live  off'  of  our  people,  the  more  that  come  the  worse  for 
us.  When  I  see  a  ship-load  of  immigrants  landed  on  our  docks,  I  feel 
anxiety,  because  I  know  that  we  shall  have  to  pay  more  taxes  to  help 
support  them. 

By  Commissi  oner  Kenner  : 

Q.  Thea  you  object  to  immigration  ? — A.  No,  sir;  not  at  all. 

Q.  I  understood  you  to  say  so;  it  seems  I  cannot  understand  you  at 
all  ? — A.  The  trouble  is  that  you  do  not  get  my  idea  of  labor ;  that  I 
do  not  want  to  prescribe  what  any  man  under  God's  heaven  shall  do. 
Let  every  man  stand  on  his  owu  basis  and  help  himself.  I  do  not  want 
to  be  taxed  to  help  support  him. 

Q.  But  you  do  not  want  him  to  remain  in  ignorance? — A.  Every 
man  has  to  take  care  of  himself  and  win  his  own  way  through  the 
world,  as  I  have  had  to  do  and  as  all  the  rest  of  us  have  had  to  do. 


YALE  COLLEGE 

LOAN  LIBRARY 
of  PollticaUEconomy. 


o    O 

>— '  o 
5   ►-^  m 


<i5  November,  1879. 


BIMETALLISM. 

IT  has  been  made  a  ground  of  reproach  against  the  pro- 
fessional economists  that  they  have  not  exerted  themselves 
sufificiently  to  expose  the  fallacies  of  bimetallism,  but  have  been 
contented  to  pass  it  by  in  contempt.  Especial  point  has  been 
given  to  this  reproach  by  the  observation  that  a  great  many 
persons  have  only  resisted  bimetallism  by  a  kind  of  sound 
instinct.  This  instinct  does  not  furnish  rational  ground  for  con- 
viction, and  many  such  persons  have  therefore  either  wavered 
or  been  disturbed  in  their  allegiance  to  sound  doctrine.  It 
belongs  to  the  scientific  economists,  it  is  said,  to  show,  upon 
due  analysis  of  the  question,  wherein  the  fallacy  lies,  and  to 
give  rational  grounds  for  sound  doctrine. 

It  is  not  worth  while  to  mention  the  reasons  or  the  excuses 
for  the  neglect  to  which  this  complaint  refers.  If  an  economist 
should  undertake  to  expose  and  combat  all  the  fallacies  which 
gain  more  or  less  acceptance,  he  would  not  have  time  for  any- 
thing else.  In  the  present  instance  there  are  more  narrow  and 
peculiar  difficulties.  If  one  attempts  to  refute  the  whole  silver 
doctrine  in  all  its  forms,  one  must  demonstrate  a  sweeping  and 
general  negative.  If  one  attempts  to  select  and  refute  a  single 
form  of  the  error,  he  will  find  that  no  writer  on  that  side  of  the 
subject  has  stated  his  opinions  and  doctrines  in  a  form  upon 
which  issues  can  be  joined,  and  a  scientific  discussion  carried  on 
with  any  prospect  of  satisfactory  results.  He  will  be  compelled 
to  argue  both  sides  at  once,  to  put  the  adversary's  case  in  shape 
for  him  before  discussing  it,  and,  if  he  attempts  this,  he  is  sure 
to  be  entangled  in  endless  charges  of  misrepresentation  and  mis- 
apprehension. For  instance,  one  writer  adopted  the  term  "  con- 
current circulation,"  and  gave  it   frequent  and  current  use  to 


BIMETALLISM. 


547 


express  his  doctrine  and  aim.  I  thought  the  term  well  chosen 
to  express  the  writer's  idea  as  I  understood  it,  and  it  seemed  to 
me  that  here  was  an  idea  so  clear  and  precise  that  we  could 
join  issue  upon  it,  make  an  analysis,  undertake  verification,  and 
so  refute  or  demonstrate,  which  is  what  I  understand  by  discus- 
sion, and  not  the  heaping  together  of  statistics,  historical  facts, 
and  authorities.  In  a  later  publication,  however,  the  same 
writer  says  :  "  The  concurrent  use  of  the  two  metals,  side  by 
side,  in  the  same  market  is  a  matter  wholly  of  indifference." 
We  have  then  this  proposition :  The  bimetallists  want  a  con- 
current circulation,  but  it  is  matter  of  indifference  whether  it  be 
concurrent.  There  is  here,  then,  no  proposition  to  discuss,  but 
only  an  illustration  of  the  vague  and  loose  thinking  upon  which 
the  whole  notion  of  the  bimetallists  is  constructed.' 

I.  What  I  propose  now  to  treat  is  bimetallism  as  it  is  popu- 
larly, however  vaguely,  believed  in  in  the  United  States,  as  it  is 
partially  adopted  in  our  legislation,  and  as  it  was  expressed  in 
the  Act  under  which  the  Silver  Commission  was  sent  to  Paris. 
The  appearance  of  the  Report  of  this  Commission''  furnishes 
the  occasion  and  the  means  for  examining  this  notion. 

It  was  provided  in  the  Act  known  as  the  Silver  Bill  that  the 
President  should  invite  the  governments  of  other  nations  to  join 
in  a  conference  "  to  adopt  a  common  ratio  between  gold  and 
silver,  for  the  purpose  of  establishing  internationally  the  use  of 
bimetallic  money,  and  securing  a  fixity  of  the  relative  value 
between  those  metals."  The  legislators  who  enacted  this  as- 
sumed and  believed  that  there  was  no  impossibility,  in  the 
nature  of  things,  in  uniting  two  metals  in  the  circulation  at  a 
fixed  ratio  of  value  ;  they  believed  that,  this  plan  being  debarred 
by  no  natural  impossibility  or  absurdity,  its  expediency  could 
be  resolved  upon  in  a  conference,  and  that  the  means  by  which 
it  could  be  realized  was  an  international  agreement  of  the  chief 
commercial  nations.  I  understand  that  these  opinions  are  held 
more  or  less  distinctly  by  all  those  who  are  popularly  called  silver 
men  amongst  us.     I  take  issue  upon  both  the  points  involved. 

•  Mr.  Horton  uses  the  term  "concurrent  circulation"  constantly  in  his  essay 
jqjpended  to  the  Report  mentioned  below. 

*  Senate  Executive  Document  No.  58,   Forty-fifth   Congress,  Third  Session. 
References  to  "  Report"  refer  to  this  document. 


548 


THE  PRINCETON  REVIEW. 


I.  The  first  raises  a  scientific  question:  Is  the  notion  that 
two  metals  can  be  joined  in  the  coinage  at  a  fixed  ratio,  by  any 
human  device  or  artifice  whatever,  true  in  science  ?  I  answer, 
No ;  it  is  just  as  false  as  the  proposition,  A  perpetual  motion  is 
possible,  would  be  in  mechanics.  This  is  certainly  the  first 
issue  to  be  settled  in  regard  to  the  silver  controversy  as  between 
educated  men ;  but  the  bimetallists  have  always  slurred  it  over. 
At  Paris,  Count  Rusconi  did  indeed  recognize  the  primary 
importance  of  this  question  in  the  first  session,  but  much  con- 
tempt was  expressed  for  the  *'  academic"  question,  and  there 
was  great  eagerness  to  be  "  practical "  and  to  go  on  to  the 
"  practical  "  question.  This  is,  indeed,  the  course  of  the  "  prac- 
tical men,"  so  called.  They  are  impatient  of  the  dogmatism  of 
the  professors,  who  say  a  perpetual  motion  is  impossible,  and 
insist  on  going  on  to  consider  the  great  practical  advantages 
which  would  accrue  if  a  perpetual  motion  were  possible,  and 
then,  because  they  think  they  see  such  advantages,  they  go  to 
work  to  construct  the  machine.  The  answer  is,  that  if  a  per- 
petual motion,  or  a  bimetallic  circulation,  were  possible,  this 
would  not  be  the  same  world  it  is  now.  It  might  be  a  better 
one,  but  surely  any  practical  man,  in  the  correct  sense  of  the 
w^ord,  will  inquire  whether  there  is  any  insuperable  obstacle,  in 
the  nature  of  things,  to  the  object  he  wishes  to  accomplish, 
before  wasting  his  time  upon  it.  If  this  is  not  so,  what  we  call 
education  is  a  pure  waste  of  time.  I  had  supposed  that  it  was 
understood  and  agreed,  amongst  educated  men,  that  the  chief 
end  of  studying  the  sciences  was  to  acquire  that  training  by 
virtue  of  which  we  recognize  the  relations  of  man  to  nature,  and 
the  limits  of  human  action. 

The  inference  to  be  drawn  from  the  importance  and  true  po- 
sition of  the  scientific  question  is  not  that  that  question  ought 
to  have  been  discussed  in  the  Conference.  Far  from  it.  That 
was  no  place  for  such  a  discussion.  The  inference  is  that  the 
Conference  was  ab  initio  an  absurd  and  senseless  undertaking. 
The  requisite  antecedents  of  any  joint  action  of  nations  are,  (i) 
that  all  scientific  questions  involved  shall  have  been  maturely 
discussed  by  scientific  men  until  a  substantial  unanimity  of 
conviction  has  been  reached  as  to  what  is  true  ;  (2)  that  these 
convictions  shall  have  been  dogmatically  taught  in  books  and 


BIMETALLISM. 


549 


periodicals  until  they  have  become  interwoven  with  the  stock 
of  convictions  and  faiths  of  the  mass  of  civilized  men  ;  (3)  that 
general  opinions  as  to  what  it  is  expedient  to  do  should,  by- 
necessary  inference,  have  come  to  be  held  by  all  civilized  men. 
When  these  conditions  are  fulfilled  it  is,  of  course,  found  that, 
for  almost  all  cases,  private  contract,  custom,  or  the  independent 
legislation  of  individual  states,  concurring  because  proceeding 
from  commonly  accepted  principles,  answers  all  the  purpose. 
The  field  for  international  conventions  has  therefore  hitherto 
been  restricted  to  postal  conventions  (common  regulations  for 
conducting  a  form  of  business  which  is  monopolized  by  govern- 
ments, but  in  which  they  act  like  the  managers  of  any  other 
business),  or  conventions  on  points  of  international  law  (in  which 
the  aim  is  to  do  justice  to  humanitarian  sentiments  wnich  have 
become  universal).  The  difificulty  of  these  latter  conventions, 
even,  is  instructive  for  the  nature  and  limits  of  international  con- 
ventions, and  the  history  of  the  Latin  Union,  as  an  isolated 
effort  towards  international  action  for  other  purposes,  is  certain- 
ly a  warning  and  not  an  encouraging  precedent.  When,  how- 
■ever,  the  action  proposed  involves  scientific  truth,  and  yet  all 
the  necessary  conditions  precedent  are  passed  over  unfulfilled, 
the  proceeding  is  devoid  of  sense.  It  could  only  have  the  form 
•of  sense  if  the  object  were  to  supersede  scientific  discussion  by 
action  and  force — the  fallacy  of  the  ecclesiastical  councils.  The 
scientific  question  belongs  where  I  now  undertake  it :  in  the 
forum  of  academic  discussion. 

We  have  then  one  issue  joined ;  I  propose  to  show  that  a 
bimetallic  circulation  is  as  absurd  and  impossible  as  perpetual 
motion,  so  that  a  convention  of  the  whole  human  race  could 
not  realize  it. 

2.  The  second  assumption  in  the  Act  above  quoted  relates  not 
to  a  scientific  truth,  but  to  a  point  of  expediency  and  practica- 
bility. It  is  assumed  that  an  international  coinage  union,  combin- 
ing and  binding  the  members  to  a  certain  programme  of  action, 
is  a  practicable  scheme,  and  needs  only  a  certain  degree  of  con- 
sultation to  be  realized.  I  shall  maintain  that  such  a  coinage 
union  is  absolutely  impracticable.  The  bearing  of  this  is  not 
directly  upon  bimetallism,  for  that  is  disposed  of  when  it  is 
shown  to  be  absurd,  but  the  coinage  union  is  an  element  in  the 
36 


e^O  "^HE  PRINCETON  REVIEW. 

scheme  properly  known  as  the  alternate  or  alternative  standard. 
These  two  schemes,  when  tested  and  weighed  from  the  scientific 
standpoint,  are  of  totally  different  character  and  value,  as  I  shall 
show  further  on.  The  question  about  the  alternate  standard  is  a 
question  of  expediency  and  practicability  in  the  main,  although 
it  also  involves  considerations  of  rights  and  justice.  The  differ- 
ence is  that  between  a  perpetual-motion  machine  and  an  ordi- 
nary machine  invented  to  meet  a  certain  purpose.  As  to  the 
latter,  the  questions  may  be  raised  whether  it  will  work  so  as  to 
do  what  it  is  made  to  do,  whether  it  will  pay,  whether  it  is  dan- 
gerous, etc.,  but  if  one  or  all  of  these  questions  were  decided 
adversely  to  the  machine,  it  would  still  not  be  an  abomination 
in  mechanics  like  a  pretended  perpetual  motion.  The  parallel 
holds  in  the  case  before  us.  The  alternate  standard  is  inex- 
pedient for  a  variety  of  reasons,  and  it  is  impracticable  because 
it  involves  the  necessity  of  an  international  coinage  union,  pre- 
scribing regulations  and  dictating  action  to  its  members,  and 
such  a  union  is  impracticable.  Still  the  alternate  standard  in- 
volves no  scientific  absurdity.  I  therefore  join  issue,  secondly, 
on  the  question  of  the  practicability  of  the  coinage  union. 

II.  Before  entering  upon  the  subject-matter,  a  word  of  expla- 
nation is  necessary  on  a  certain  point.  If  a  monometallist  means 
a  man  who  urges  that  all  nations  ought  to  use  gold  money,  I 
know  of  no  such  person  in  the  world.  It  is  one  great  error  of 
the  bimetallists  that  they  assume  to  know  and  judge  what  money 
all  the  world  ought  to  use.  No  one  can  reach  any  such  judgment, 
on  the  one  side  or  the  other,  who  uses  correct  processes  in  the 
investigation  of  economic  truth.  Every  nation  ought  to  use  just 
that  money  which,  in  its  own  judgment,  its  interests  and  con- 
venience dictate.  The  economist  has  to  note  what  course  na- 
tions pursue  under  this  motive,  to  study  the  consequences,  in- 
terpret the  phenomena,  and  deduce  the  inferences  which  are 
presented  to  him  by  the  facts  themselves.  For  myself,  there- 
fore, I  have  always  repudiated  the  name  Monometallist  as  a  sec- 
tarian name,  which  no  scientific  economist  would  be  willing  to 
bear. 

III.  The  historical  facts  bearing  on  bimetallism  and  kindred 
topics  have  been  collected  with  great  zeal  during  the  last  few 
years,  but  they  have  rarely  been    interpreted  with  the  simple 


BIMETALLISM. 


551 


fidelity  and  loyalty  just  described.  Let  us  recapitulate  as 
briefly  as  possible,  in  their  chronological  order,  the  facts  which 
are  here  of  importance. 

A.  The  attempt  to  use  two  metals  together  has  been  kept  up 
from  the  earliest  use  of  money  to  the  present  time,  and  has  con- 
stituted a  problem  in  money.  It  was  deemed  necessary  to  use 
two  metals,  but  no  means  has  ever  been  devised  for  using  two 
which  has  not  failed,  besides  producing  confusion,  loss,  injustice, 
and  commercial  distress.  In  171 7,  still  essaying  to  solve  the 
same  problem,  the  English  guinea  was  rated  at  21  silver  shillings. 
It  was  not  worth  that  amount,  and  so  became  the  cheaper  me- 
dium, and  the  standard  of  prices  and  credits.  The  good  silver 
coins  were  melted,  and  those  which  remained  were  clipped  so  as 
to  be  worth  less  than  ^  of  a  guinea.  After  the  clipping  once 
began,  it  went  on  from  worse  to  worse,  as  always  under  the 
same  circumstances,  but  the  need  for  "  change"  kept  the  silver 
coins  afloat.  After  the  middle  of  the  century  the  depreciation 
became  so  great  that  it  led  to  a  clipping  of  the  gold  coins  also. 
In  1773  silver  coins  were  made  legal  tender  for  no  sums  over 
£2^,  by  weight,  at  ^s.  2d.  per  oz.  In  1785  France  adopted  the 
ratio  of  I  to  15I-  in  a  reformation  of  the  coinage,  as  another 
attempt  to  hit  the  true  ratio  and  keep  the  two  metals  in  circu- 
lation. In  1803  the  same  ratio  was  ratified.  The  French  law 
of  1 785-1 803  was  therefore  no  new  or  special  solution  of  the 
coinage  problem,  but  only  another  attempt  such  as  those 
which  had  been  made  before.  Under  the  operation  of  this 
law,  France  used  silver  as  a  standard  until  the  middle  of 
the  century.  In  18 16  a  new  coinage  system  was  adopted 
in  England  which  really  accepted  and  put  into  a  system 
the  state  of  things  which  had  grown  up  by  custom  during  the 
last  century — single  gold  standard,  with  silver  subsidiary  depre- 
ciated coins,  limited  in  amount,  and  limited  legal  tender.  It  was 
from  a  study  of  the  phenomena  produced  during  the  previous 
century  by  the  operation  of  the  laws  of  trade  upon  the  legal 
system  that  the  English  statesmen  were  led  to  this  system. 
The  law,  therefore,  followed  custom  and  the  laws  of  trade,  and 
did  not  attempt  to  coerce  them.  The  sovereign  now  became  a 
money  of  moneys,  i.e.,  other  moneys  and  currencies  were  common 
denominators  of  value  within  certain  local  limits.     When  a  sec- 


552 


THE  PRINCETON  REVIEW. 


ond  common  denominator  was  wanted  to  connect  the  operations 
of  these  local  areas  with  each  other,  the  sovereign  met  the  need. 
That  English  money  and  English  commerce  thus  mutually  sus- 
tained each  other  was  only  an  illustration  of  the  principle  that 
good  institutions  support  prosperity  and  prosperity  supports  the 
utihty  of  good  institutions.  The  connection  between  them  is 
organic,  not  mechanical.  In  1834  the  United  States  passed  a 
new  law  for  a  coinage  of  two  metals,  but  purposely  rated  the 
metals  so  as  to  get  gold.  In  1853,  having  obtained  a  gold  stand- 
ard by  the  operation  of  the  law  of  1834,  they  reduced  all  the 
silver  coins  except  the  dollar  to  a  subsidiary  condition,  and  intro- 
duced the  English  system.  In  1853-4,  by  the  fall  in  gold,  France, 
under  the  operation  of  her  law,  became  a  gold  country.  She 
was  burdened  with  the  expense  of  the  change  from  silver  to 
gold,  but  this  was  regarded  as  a  slight  price  to  pay  for  a  change 
which  was  opportune  to  her  interests.  In  1865  the  Latin  Union 
was  formed.  The  nations  composing  it  adopted  the  French 
law,  and  became  like  France,  by  the  operation  of  that  law,  gold 
countries.  In  1867  an  International  Monetary  Conference  was 
held,  at  which  it  was  proposed  to  establish,  by  agreement,  what 
existed  in  fact — the  use  of  gold  as  a  standard  amongst  the  na- 
tions represented.  After  the  formation  of  the  North  German 
Confederation  in  1867,  an  event  which  to  a  certain  extent  met 
the  German  aspirations  for  political  unity  and  national  standing, 
it  was  felt  that  one  of  the  greatest  obstacles  to  the  realization  of 
the  further  hopes  of  commercial  and  industrial  greatness  lay  in 
the  currency  of  the  country.  The  standard  was  silver.  The 
coins  were  cumbersome.  The  small  coin  was,  much  of  it,  base 
billon.  The  bank-note  currency  also  required  reformation. 
After  the  war  of  1870  and  the  formation  of  the  empire,  all  the 
motives  for  a  currency  reform  were  increased  in  force,  and  when 
such  reform  was  undertaken,  all  the  considerations  which  had 
weight  dictated  that  it  should  be  carried  through  to  the  adoption 
of  the  gold  standard.  The  Scandinavian  nations  followed  the 
example  of  Germany.  In  1873  the  United  States  codified  and 
simplified  their  coinage  laws  according  to  the  existing  laws  and 
customs  of  the  country,  and  according  to  what  would  best  serve 
the  interests  of  the  country  when  specie  payments  should  be 
resumed.     They  struck  the  silver  dollar  from  the  list  of  coins 


BIME  TA  LLISM.  553: 

which  the  mint  was  permitted  to  coin,  on  which  hst  it  had  stood 
as  an  idle  and  unused  permission,  and  brought  the  United 
States  to  the  simple  gold  standard  with  subsidiary  silver.  In 
1873  silver  began  to  fall  by  important  steps.  The  operation 
of  the  French  law  would  now  have  taken  away  gold  and  given 
silver  to  the  Latin  Union.  The  movement  in  this  direction, 
however,  was  far  differently  welcomed  from  the  contrary  move- 
ment of  1853.  The  Latin  Union  refused  to  give  up  a  gold  cur- 
rency and  take  silver,  and  undergo  the  loss  of  sustaining  silver 
besides.  It  closed  its  mints  against  silver,  and  the  "  double 
standard  "  ceased  to  be. 

1.  Any  one  now  who  reviews  this  series  of  historical  facts, 
not  in  order  to  interpret  them  by  some  ulterior  design  assumed 
to  have  existed,'  but  for  just  what  they  are,  will  see  that  there 
was  no  ulterior  design,  no  set  purpose,  no  agreement  or  combi- 
nation, but  that  each  nation  acted  as  its  own  interests  dictated, 
and  that  the  concord  of  action  and  general  tendency  towards  the 
adoption  of  gold  on  the  part  of  all  the  great  commercial  nations, 
substantially  in  the  order  of  their  commercial  importance,  consti- 
tutes one  of  those  great  historical  movements  which  are  not  to- 
be  criticised  or  corrected,  but  which  impose  upon  the  student 
the  convictions  which  he  is  to  adopt. 

2.  It  is  plain  from  a  correct  statement  of  the  facts  that  the 
action  of  Germany  in  demonetizing  silver  was  by  no  means  arbi- 
trary. It  had  the  fullest  motives  and  occasion  in  the  state  of 
that  nation,  and  its  interest  and  convenience.^ 

3.  The  action  of  the  Scandinavian  nations  was  not  arbitrary 
or  destitute  of  motive.  The  movement  towards  gold  was  now  so 
far  advanced  that  the  small  nations  were  forced  to  join  it  in  self- 
defence.  The  last  to  join  it  would  be  loaded  with  the  discarded 
silver,  and  would  have  to  endure  a  large  part  of  the  total  loss. 
upon  it.  This  is  only  an  illustration  of  the  rapid  impulse  with 
which  such  movements  finally  complete  themselves,  when  the 
forces  have  acquired  momentum. 

4.  The  action  of  the  United  States  in  1873  was  guided  by 

>  Mr.  Horton  (Report,  p.  240).  Mr.  Horton  speaks  (p.  745)  of  the  "  partisans 
of  gold  and  persecutors  of  silver." 

*The  argument  of  Gen.  Walker  before  the  Conference  was  based  upon  the 
assertion  that  Germany's  action  was  arbitrary.     See  Report,  p.  74. 


554 


THE  PRINCETON  REVIEW. 


previous  legislation,  custom,  fact,  convenience,  and  the  interests 
of  the  country,  as  they  then  appeared,  and,  so  far  as  any  evi- 
dence has  ever  been  brought  forward,  by  nothing  else. 

B.  We  come  now  to  the  latest  incident  in  this  historical  devel- 
opment— a  case  of  action  which  was  indeed  arbitrary  and  desti- 
tute of  motive.  The  United  States  were  in  currency  trouble  of 
their  own,  serious  enough  and  difificult  enough,  in  itself  consid- 
ered, but  they  enjoyed,  from  the  suspension  of  specie  payments, 
one  incidental  advantage.  They  had  no  part  or  lot  in  the  silver 
difficulty.'  They  had  no  stock  of  silver  on  which  to  suffer  loss. 
Their  laws  were  in  proper  shape  to  secure  resumption  on  the 
best  system  of  coinage  yet  devised.  They  had  time  before  them. 
They  could  wait  for  developments  and  take  advantage  of  any 
state  of  affairs  which  might  arise,  without  taking  any  speculative 
risks  at  all.  Mr.  Horton  thinks  the  United  States  had  a  great 
interest  because  the  demonetization  of  silver  made  resumption 
harder.  Resumption  on  silver  would  have  been  easier  than  re- 
sumption on  gold,  just  as  resumption  would  have  been  easier  if 
the  gold  dollar  had  been  reduced  ten  per  cent  in  weight,  and 
not  otherwise.  In  this  state  of  things,  then,  the  United  States 
wilfully  plunged  into  the  silver  difficulty,  and,  moreover,  came 
forward  to  tell  those  who  were  in  silver  difficulty  how  to  get  out, 
and  volunteered  to  lead  the  way.  All  the  other  nations  repre- 
sented at  the  Conference  had  an  interest  in  the  silver  problem, 
but  all  refused  to  act,  with  the  possible  exception  of  Italy. 
The  United  States  had  no  interest,  but  nevertheless  took  ac- 
tion. As  a  consequence,  this  nation  now  has  thirty  million 
dollars  of  capital  invested  in  silver,  which  is  lying  idle  and  can- 
not be  disposed  of  without  loss.  This  sum  and  a  large  amount 
in  trade  dollars  have  been  retained  at  home  as  a  new  element 
of  disorder  in  our  currency,  instead  of  following  their  natural 
course  to  the  East.  If  the  advocates  of  free  coinage  for  silver 
had  had  their  way,  we  should  also  have  received  thirty  or  forty 
millions  in  silver  instead  of  the  same  amount  in  gold  received 
this  Fall.     Mr.  Horton  is  of  opinion  that  this  was  a  noble  ao  ■ 

'  I  suppose  it  is  necessary  to  say  that  the  interest  of  American  silver  producers 
was  no  interest  of  the  United  States.  The  iron  producers  were  in  worse  trouble 
than  the  silver  producers,  but  no  one  proposed  that  the  nation  should  expend  caoi' 
tal  to  ' '  bull "  iron. 


BIMETALLISM. 


555 


tion,  on  the  part  of  the  United  States  on  behalf  of  mankind 
in  general,  which  has  rarely  been  paralleled.  It  was,  in  fact,  a 
piece  of  national  Quixotism  which  has  no  parallel  in  history. 
The  same  writer  quotes  this  action  as  an  exception  or  offset  to 
the  uniform  tendency  of  the  historical  events  above  cited,  but 
its  arbitrary  and  unfounded  character  rob  it  of  any  force  for 
such  a  deduction. 

IV.  It  is  impossible  that  I  should,  within  the  limits  of  the 
present  article,  review  and  criticise  the  points  raised  at  the  Con- 
ference. Two  or  three  of  the  chief  of  them  here  demand  brief 
attention. 

I.  The  American  delegates  began  by  slandering  the  legisla- 
lation  of  their  country,  and  it  was  left  for  a  foreigner  to  show  (i) 
that  the  historical  facts  about  the  legislation  of  1873  were  incor- 
rectly stated  by  the  American  delegates,  and  (2)  that  the  United 
States  are  a  constitutional  country,  not  ruled  by  plebiscites,  and 
that  we  cannot  plead  ignorance  on  the  part  of  "the  people" 
against  legislation  constitutionally  adopted.  Gen.  Walker  en- 
deavored to  sustain  the  allegations  of  his  colleague  by  saying  that 
he,  although  a  professor  of  political  economy,  engaged,  at  the 
time,  in  lecturing  on  money,  did  not  know  what  was  going  on. 
It  does  not  appear  that  this  argument  elicited  any  reply.  Per- 
haps it  was  thought  that  its  force  all  lay  in  the  recoil,  and  some 
wonder  may  have  been  excited  whether  all  American  economists 
would  have  been  obliged  to  say  the  same.  The  fact  is  that  the 
Act  of  1873  so  simply  enacted  the  existing  law  and  facts  that  no 
one  attributed  any  importance  to  it. 

2.  The  chief  reasons  adduced  for  the  action  proposed  by  the 
United  States  were  vague  and  undefined  terrors  of  consequences 
from  the  historical  movement  we  have  described.  It  was  alleged 
that  half  the  money  in  the  world  has  been  cancelled.  This  as- 
sertion has  no  foundation  in  fact.  The  amount  demonetized  is 
just  exactly  what  has  been  demonetized,  viz.,  the  amount  of 
silver  held  by  Germany  and  the  Scandinavian  States,  and  to  this 
there  have  been  important  offsets.  In  the  first  place,  there  has 
been  the  production  of  gold  since  1873,  which,  according  to 
Soetbeer's  calculations,'  must  have  averaged  one  hundred  and 

^  Edelmetall-Production  {Pctervianns  Mittheihingen,  Erg.  Heft'^o.  57,  p.  112). 


556  THE  PRINCETON  REVIEW. 

twenty  million  dollars  per  annum.  In  the  second  place,  all  the 
silver  five-franc  pieces  in  existence  have  been  added  to  the  stock 
of  "  money."  Before  the  fall  in  silver  they  were  worth  more  than 
gold  and  were  merchandise.  Since  they  fell  to  an  equality  with 
gold  (below  it  in  value;  held  equal  by  limitation'),  they  have 
been  available  as  money.  It  would  be  very  difficult  to  show 
that,  comparing  1879  with  1873,  there  has  been  any  contraction 
whatever  of  the  metallic  money  of  Europe  and  the  United 
States.  The  expansions  and  contractions  of  paper  money  in 
Europe  and  North  and  South  America,  within  twenty  years, 
have  had  far  greater  influence  on  credit  and  prices  the  Avorld 
over  than  the  changes  connected  with  silver. 

3.  The  fear  was  also  expressed  that  the  adoption  of  gold 
would  destroy  the  par  of  exchange  with  silver  countries,  and  it  was 
urged  that  the  bimetallic  system  would  furnish  a  "normal"  par. 
What  is  the  "par"  of  exchange?  Exchange  is  a  ratio  between 
two  quantities.  How  can  the  ratio  between  two  quantities  be 
** destroyed"  so  long  as  the  quantities  exist?  The  par  of  ex- 
change is  an  entirely  imaginary  mean-line  between  fluctuations 
which  are  constant,  and  it  has  no  importance  except  for  the 
academic  explanation  of  phenomena.  We  can  make  a  "  normal '' 
par  any  minute;  $4.44— ;^i  is  as  good  a  par  as  any.  The  sov- 
ereign and  the  dollar  may  then  each  of  them  be  gold,  silver,  or 
anything  else ;  their  values  will  have  a  ratio  to  each  other,  and 
may  be  stated  in  percentages  of  $4.44. 

V.  I  proposed,  however,  to  examine  the  bimetallic  notion  in 
its  essence,  and  to  proceed  with  that  task  it  is  necessary  to  con- 
sider the  relation  of  legislation  to  value.^  For  the  exposition  of 
the  bimetallic  fallacy,  as  well  as  a  number  of  others  which  are 
now  widely  held  and  even  taught,  it  is  necessary  to  show  that 
legislation  cannot  affect  value  at  all.  If  it  could,  the  text-books 
of  political  economy  are  very  faulty  in  their  analysis  of  value, 
since  no  one  of  them  specifies  legislation  amongst  the  forces  by 
which  value  is  controlled. 

^The  Bank  of  France  in  September  charged  one  tenth  of  one  per  cent  premium 
on  gold  over  silver. — Economist,  Sept.  6,  p.  1026. 

'  "  Let  me  dwell  upon  the  fundamental  error  which  suggests  the  measure  which 
has  been  proposed.  That  error  is  the  belief  that  it  appertains  to  governments  to 
call  value  into  existence."     (Mr.  Pirmez.     Report,  p.  121.) 


BIME  TA  LLISM.  557 

1.  The  value  of  a  thing  is  controlled  by  supply  and  demand 
and  by  nothing  else.  Supply  and  demand  are  natural  forces  and 
act  under  natural  laws.  By  this  we  mean  that  supply  and  de- 
mand spring  into  action  from  the  presence,  in  certain  relations 
to  each  other,  of  certain  natural  facts.  The  natural  facts,  in  this 
case,  are  (i)  a  society  of  men  having  certain  needs,  and  (2)  mate- 
rial goods  fit  to  satisfy  those  needs.  The  needs  of  the  men  for 
the  goods  do  not  exist  because  the  men  so  choose,  but  because 
they  are  men.  The  goods  are  not  supply  for  the  needs  because 
the  men  so  decide,  but  by  virtue  of  natural  qualities.  Supply 
and  demand  are  therefore  complementary  parts  of  a  force  which 
is  natural  in  the  same  sense  that  any  physical  force  is  natural. 
This  force  must  arise  when  its  natural  conditions  exist ;  it  can- 
not arise  unless  they  exist ;  when  it  arises  it  acts  under  natural 
law — that  is,  produces  a  regular  succession  of  phenomena  in  a ' 
determined  sequence — and  the  statement  of  the  law  in  human 
language  must  be  made  by  describing  the  conditions  of  equi- 
hbrium  between  the  complementary  parts,  since  it  is  by  their 
equilibrium  that  the  supply  performs  its  function,  and  the 
needs  receive  satisfaction,  and  the  economic  force  is  merged 
in  the  vital  force  of  man.  The  action  of  man  on  natural  forces 
is  restricted  to  dividing,  combining,  and  diverting  them.  He 
can  neither  create  nor  destroy  them.  The  forces  may  be  di- 
vided, but  the  sum  of  the  effects  must  always  be  perfectly  pro- 
portioned to  the  force,  neither  less  nor  more.  If  any  portion 
of  the  force  is  missing  in  the  effect,  our  task  is  not  complete 
until  we  have  followed  it,  ascertained  its  incidence  and  effect, 
and  united  it  to  the  rest. 

2.  Gold  has  its  own  conditions  of  supply  and  demand,  and 
silver  has  its  own  conditions  of  supply  and  demand,  and  they 
are  both  independent  of  each  other.  Those  conditions  are  facts 
in  regard  to  the  actual  existence  of  the  metals  within  the  reach 
of  man  on  the  one  side,  and  the  increasing,  decreasing,  or  chang- 
iHg  needs  of  the  human  race,  as  it  lives  its  life  on  earth,  upon  the 
other.  Legislation  can  affect  these  conditions  in  no  respect 
whatever.  It  cannot  increase  or  decrease  the  amount  of  the 
metals  within  the  reach  of  man,  or  his  willingness  to  labor  to 
produce  them  according  to  the  profit  of  such  production.  It 
cannot  make  men  want  what  they  do  not  want,  or  cease  to  want 


558  THE  PRINCETON  REVIEW. 

what  they  do  want.  Economic  phenomena  are  due  to  economic 
forces,  and  one  of  the  first  lessons  the  student  has  to  learn  is  not 
to  rest  from  his  analysis  until  he  has  reduced  economic  phe- 
nomena to  economic  forces  and  laws. 

One  might  as  well  tell  a  physiologist  that  his  science  is  false 
because  no  man  ever  existed  whose  organs  were  all  perfectly 
normal  in  their  functions,  as  to  contradict  an  economist  because 
no  man  ever  acted  from  purely  economic  motives.  Indeed  the 
absurdity  is  far  greater  in  the  latter  case,  since  the  economist 
-deals  with  societies,  not  individuals  ;  so  that  not  only  is  the  in- 
ference unfounded,  but  the  fact  alleged  is  untrue  of  societies. 
One  might  as  well  object  against  a  physiologist,  when  he  states 
physiological  laws,  that  moral  forces  (or,  rather,  more  or  less 
immoral  forces,  for  that  is  what  we  mean)  affect  the  bodily  func- 
tions, as  to  interpose  the  objection  against  economic  laws  that 
immoral  forces  affect  economic  phenomena.  The  fact  in  both 
cases  is  undeniable  ;  the  inference — that  these  external  interfer- 
ences alter  natural  forces  and  laws,  and  therefore  ought  to  be 
taken  into  account  in  the  statement  of  scientific  principles — is 
equally  unfounded  in  both.  One  might  as  well  tell  a  physiolo- 
gist that  a  knife  thrust  into  an  organ  alters  physiological  forces 
and  laws,  as  to  tell  an  economist  that  legislation  controls  the  laws 
of  value.  It  is  because  the  physiological  laws  are  not  altered 
that  the  victim  dies.  The  hygiene,  pathology,  and  therapeutics 
of  society  are  mixed  with  its  physiology  in  our  text-books,  but 
the  scientific  distinctions  must  be  maintained  intact  if  we  would 
reason  correctly.  Value  belongs  to  the  physiology  of  society, 
legislation  almost  always  to  its  pathology.  Legislation  creates 
the  conditions  of  disease,  leads  to  distorted  organs,  disordered 
functions,  deceptive  phenomena  (§  4  below),  and  taxes  the  saga- 
city and  clear-headedness  of  the  student  to  find  again  the  normal 
forces  in  their  distorted  action ;  but  we  have  to  guard  ourselves 
well  against  the  delusion  that  it  changes  forces  or  laws.  To 
adopt  that  delusion  is  to  lose  perception  of  the  difference  be- 
tween social  health  and  social  disease.  We  are  struggling  here 
for  the  introduction  into  political  economy  of  universal  canons 
of  science  which  are  recognized  in  all  other  departments  which 
enjoy  authority  and  are  making  real  progress. 

3.  One  chief  cause  of  the  notion  amongst  us  that  legislation 


BIME  TA  LLISM.  559 

can  regulate  the  value  of  money  is,  no  doubt,  the  provision  in 
the  Constitution  of  the  United  States  that  Congress  shall  have 
power  so  to  do.  Why  was  it  not  also  provided,  in  connection 
with  the  cognate  power  "  to  fix  the  standard  of  weights  and 
measures,"  that  Congress  might  regulate  the  length  and  weight 
of  things?  Here  is  a  table.  It  is  so  long.  How  long?  Just 
the  quantity  of  extension  in  one  dimension  which  it  has  as  a 
physical  fact.  If  you  were  here,  you  would  see  it.  As  you  are 
not,  I  have  recourse  to  ratios  to  other  extensions  which  you  do 
know.  It  has  the  same  length  as  the  distance  from  a  man's 
nose  to  the  end  of  his  middle  finger.  The  Congress  of  the 
United  States,  however,  has  provided  an  arbitrary  standard  of 
length,  now  grown  familiar  by  use,  and  if  I  write  that  this  table 
is  a  yard  long,  it  will  be  a  far  more  convenient  and  accurate 
designation,  because  it  will  refer  to  a  more  accurate  length, 
equally  familiar.  If  Congress  had  adopted  a  standard  yard  as 
long  as  what  we  now  call  a  foot,  that  would  have  become 
familiar,  I  should  then  have  written  three  yards  instead  of  one, 
and  the  knowledge  conveyed  would  have  been  the  same.  Now 
how  large  a  Congressional  majority  would  it  take  to  make  this 
table  one  thousandth  of  an  inch  longer  or  shorter  than  it  actu- 
ally is  ?  The  parallel  with  the  case  of  money  is  complete.  The 
Constitution  of  the  United  States  could  not  confer  powers  which 
nature  has  never  given  to  mankind.  Congress  cannot  regulate 
the  value  of  money  until  it  can  make  a  man  give  for  a  gold 
dollar  one  grain  of  wheat  more  than  supply  and  demand  force 
him  to  give,  or  yield  a  gold  dollar  for  one  grain  less  than  supply 
and  demand  will  give  him  for  it.  To  regulate  the  value  of  money 
is  to  fix  prices,  and  Congress  has  never  tried  that  since  it  has 
existed.  Congress  can  determine  how  heavy  a  piece  of  metal 
of  a  certain  fineness  shall  be  the  standard  of  value,  just  as  it 
determines  how  long  a  bar  shall  be  the  standard  of  length  ;  but 
it  cannot  regulate  the  value  of  a  coin  any  more  than  it  can 
regulate  a  physical  object  to  make  it  longer  or  shorter  than  it  is. 
4.  The  cases  of  apparent  interference  with  supply  and  de- 
taaand  by  individuals,  combinations,  and  governments  are  all 
vases  of  monopoly,  which  is  only  a  special  case  of  supply  and 
demand.  An  artificial  monopoly  is  possible  whenever  the  sup- 
ply is  capable  of  comprehension  and  limitation,  and   the  ma- 


560  THE  PRINCETON  REVIEW. 

hipulation  of  a  monopoly  consists  in  so  limiting  the  supply  and 
adjusting  it  to  the  demand  as  to  make  the  market  take  some 
amount  at  some  price.  If  the  monopolist  wants  to  sell  more, 
he  must  yield  on  his  price.  If  he  wants  a  higher  price,  he 
must  be  content  to  sell  less.  It  would  be  a  great  mistake,  how- 
ever, to  say  that  a  monopolist  controls  value.  It  is  just  because 
he  does  not  control  value  that  he  makes  anything.  There  is 
still  a  true  point  of  equilibrium  which  supply  and  demand  would 
reach,  if  free,  and  it  is  out  of  the  margin  between  that  point  and 
the  point  at  which  the  monopolist  fixes  the  market  price  that 
his  gains,  as  monopolist,  come.  There  is  no  other  scientific  ex- 
planation of  those  gains.  A  "  corner"  is  a  modified  ease  of 
monopoly,  in  which  the  first  action  is  exerted  upon  the  demand. 
All  offered  is  bought  at  a  price  above  what  any  other  buyer  will 
pay.  This  operation,  however,  is  only  preliminary  to  the  forma- 
tion of  a  monopoly,  and  a  monopoly  sale.  It  would  be  sense- 
less unless  there  was  a  demand  foreseen,  which  would,  for  some 
reason,  be  so  strong  as  to  ensure  the  monopolists  a  sale  at  a 
price  above  what  they  pay.  What  the  monopolist  does,  then, 
in  either  case,  is  to  fix  the  ratio  at  which  the  exchange  actually 
takes  place  at  a  different  ratio  from  that  which  value  would  es- 
tablish. He  thereby  transfers  other  men's  goods  to  himself 
without  giving  any  equivalent,  and  it  is  precisely  because  value 
gives  us  a  second  point  of  comparison  that  we  are  able  to  say 
that  the  action  of  the  monopolist  is  unjust  and  oppressive,  and 
that  monopolies  are  justly  odious. 

5.  The  apparent  cases  of  legislative  interference  with  value 
are  cases  in  point.  Subsidiary  coins  are  a  case  of  monopoly, 
and  the  problem  of  their  management  is  to  limit  the  supply  to 
the  demand  of  the  community  for  said  coins  at  their  nominal 
value.  Paper  money  is  a  case  of  monopoly.  The  problem  of 
its  value,  which  has  troubled  so  many  writers,  is  to  hold  the 
supply  at  or  below  the  demand  of  the  community  for  money  to 
do  its  business  with  at  par  with  coin.  If  the  supply  of  paper 
dollars  is  made  to  exceed  the  number  of  gold  dollars  which 
the  country  would  need,  they  will  no  longer  hold  a  value  equal 
to  the  value  of  a  gold  dollar  each.  The  tariff  is  a  case  of  mo- 
nopoly. The  protected  producers  can  get  the  market  price  plus 
the  tariff,  only  by  selling  less  than  the  community  would  take 


,       BIMETALLISM.  561 

at  the  market  price.  If  they  increase  the  supply,  they  may  run 
down  the  price  in  the  home  market  below  the  price  in  the 
world's  market.  Hence  paper  money  transfers  property  from 
its  just  possessors  to  the  issuers  of  the  paper,  without  equiva- 
lent, and  tariffs  transfer  property  from  the  unprotected  owners 
to  the  protected  producers  without  an  equivalent.  The  extent 
to  which  this  takes  place  depends  on  the  manipulation  of  the 
monopoly ;  the  effect  of  legislation  is  limited  to  the  creation  of 
the  opportunity  for  a  monopoly. 

6.  Legal-tender  laws,  when  they  are  what  they  ought  to  be, 
simply  enactments  of  what  is  the  universal  custom  and  under- 
standing, are  rarely  if  ever  called  into  action  at  all.  It  seems  to 
be  forgotten  that  this  is  their  original  and  only  proper  character, 
and  whenever  such  laws  are  proposed  or  referred  to,  laws  are 
always  meant  which  involve  some  coercion,  or  distortiom  of  the 
terms  of  a  contract.  Legal-tender  laws  of  this  character  do  not 
alter  truth,  justice,  or  value.  They  only  transfer  property.  A 
legal-tender  law  does  not  make  90  paid  =  100  due  a  true  equa- 
tion. The  only  true  equation  is  90  paid  +  10  retained  ==  100  due. 
Legal-tender  laws  alter  the  line  between  mine  and  thine  so  that 
something  which  was  on  one  side  is  now  on  the  other,  but  they 
do  not  affect  the  validity  of  the  venerable  distinction.  The 
legal-tender  law  simply  provides  that  the  courts  which  admin- 
ister justice  under  the  Constitution  and  laws  of  the  country  in 
question  shall  not  listen,  in  certain  cases,  to  the  plea  of  the  citi- 
zen who  complains  of  injustice ;  in  other  words,  it  withdraws 
the  protection  of  the  courts  of  justice,  in  certain  cases,  from 
citizens  who  complain  of  injustice.  Some  decisions  even  seem 
to  go  so  far  as  to  interpret  the  law  so  that  A  may  demand  B's 
property  and  discharge  B's  claim  with  an  arbitrary  allowance 
to  which  B  never  consented.  In  all  cases  it  is  because  the 
forces  of  nature  act  in  perfect  fidelity  to  their  laws  that  we 
can  see  and  define  the  injustice  of  this  legislation.  It  is  be- 
cause the  legislation  has  not  affected  the  law  of  value  that 
we  can  have  another  state  of  things  in  mind  as  right  and  just, 
and  can  often  measure  the  degree  to  which  legislation  has 
transferred  the  products  of  one  man's  labor  and  economy  to 
another  man's  use  and  enjoyment.  It  would  be  difficult  indeed 
to  prove  that  the  value  of  a  man's  property  or  his  right  to  it 


562 


THE  PRINCETON  REVIEW. 


was  affected  by  stealing  it  from  him.  Value  is  one  form  of 
truth,  and  truth  is  not  affected  by  majorities.  The  notion  that 
legislation  affects  value  must  therefore  be  positively  condemned 
as  the  root-error  of  a  dozen  mischievous  fallacies.  Legislation 
transfers  property,  and  that  is  all  it  ever  does. 

7.  It  is  necessary  to  notice  also  the  law  which  governs  all 
combinations.  If  a  single  individual  undertakes,  for  instance,  to 
establish  a  corner,  he  may  be  reasonably  sure  of  his  own  will, 
intention,  and  plan,  and  may  carry  it  out  if  he  does  not  lose  his 
head  and  prove  inconsistent  with  himself — which  indeed  some- 
times occurs.  If  he  finds  it  necessary  to  associate  another  with 
himself,  there  arises  the  need  of  selecting  a  congenial  comrade 
and  of  securing  consent,  co-operation,  loyalty,  and  good  faith 
between  two  separate  wills.  The  difficulty  of  such  combination 
is  not  double  that  of  an  individual  operation  ;  it  may  be  twenty- 
fold  greater.  If  three,  five,  ten,  twenty  persons  must  be  com- 
bined, the  difficulty  advances  in  a  tremendous  ratio  until  it 
becomes  a  practical  impossibility.  Hence  the  manipulation  of 
a  corner  or  a  monopoly  does  not  gain  force  or  become  easier 
as  the  task  is  widened  and  the  number  of  participants  is 
increased,  but  the  force  decreases  in  an  enormous  ratio  to  the 
extension  of  the  party,  and  the  practical  chances  of  success 
diminish  in  an  equally  rapid  ratio  to  the  number  of  participants. 

VI.  Having  elucidated  these  points,  which,  by  the  way,  show 
the  need,  in  economic  discussions,  of  firm  grasp  of  elementary 
notions  and  principles,  we  may,  in  a  brief  space,  bring  them  to 
bear  on  the  thesis  with  which  we  started. 

I.  Inasmuch  as  gold  and  silver  have  independent  conditions 
of  supply  and  demand  in  natural  facts,  their  relative  value 
may  remain  the  same  through  a  long  period,  or  one  or  the 
other  may  grow  dearer,  and  the  fluctuations  may  be  rare  or  fre- 
quent, wide  or  narrow,  sudden  or  gradual,  in  all  possible  com- 
binations and  sequences.  It  has  been  proposed  to  form  an 
international  union,  to  establish  a  fixed  ratio  for  the  mints  of 
all  members  of  the  union,  and  to  make  either  metal  legal  tender. 
By  this  plan  it  is  proposed  to  change  from  one  metal  to  the 
other  as  fluctuations  take  place,  and  it  is  expected  that  the 
fluctuations  will  be  limited  in  their  range,  but  it  is  not  expected 
that  a  concurrent  circulation  will  be  produced,  or  that  the  whole 


BIMETALLISM.  563 

stock  of  both  metals  will  be  brought  to  act  on  credit  and  prices. 
Reserving  for  the  present  the  question  of  the  practicability  of 
the  coinage  union,  it  may  be  admitted  that,  under  some  circum- 
stances, the  fluctuations  would  be  limited,  but  they  would  be 
more  frequent  and  sudden,  and  the  system  would  be  at  the  sport 
of  chance,  as  the  Latin  Union  was.  These,  however,  are  minor 
difificulties.  The  legal-tender  law,  by  which  all  this  is  to  be  ac- 
complished, would  simply,  as  above  shown,  transfer  property. 
The  gain,  if  any,  would  be  a  gain  to  some  at  the  expense  of 
others.  In  plain  language,  the  project  is  one  for  uniting  the 
debtor  classes  of  all  civilized  nations  in  a  "  corner"  on  the  falling 
metal.  Such  a  project  has  no  parallel  save  in  some  of  the  wild- 
est plans  of  the  International  Society.  The  profits  of  the  corner 
would  come  out  of  the  creditor  class  and  the  holders  of  the  rising 
metal.  It  would  be  establishing  on  a  world-wide  scale,  and  by 
force  of  law,  an  injustice  by  which  some  men  would  throw  the 
risks  and  loss  of  their  business  on  other  men,  who  already  have 
the  risks  and  losses  of  their  own  business  to  carry.  For  instance, 
some  Liverpool  merchants  interested  in  the  South  American  and 
East  Indian  trade  have  suffered  loss  by  the  fall  in  silver.  They 
are  eager  for  the  "double  standard"  to  save  them  from  their 
losses,  and  no  doubt  it  would  do  so,  but  only  by  throwing  those 
losses  on  the  whole  creditor  class  of  England.  Now,  the  creditor 
class  of  England  is  scattered,  unorganized,  and  unknown,  but  it 
is  safe  to  say  that  it  has  its  own  troubles  from  business  and 
investments,  and  is  suffering  from  loss  of  dividends,  failure  of 
banks,  fall  in  prices,  fall  in  rents,  fire,  shipwreck,  and  all  the  other 
chances  and  accidents  of  life.  The  advocates  of  the  "  alternate 
standard  "  have  contented  themselves  with  dilating  upon  the 
effect  of  their  scheme  in  narrowing  the  fluctuations  of  the 
market  rate  of  the  metals,  without  reflecting  that  no  such  effect 
could  be  attained  without  an  expenditure  of  force,  at  somebody's 
expense,  elsewhere. 

2.  But  the  coinage  union  is  a  practical  impossibility.  France, 
a  country  with  a  free  mint  for  both  metals,  standing  between 
Germany,  a  silver  country,  and  England,  a  gold  country,  was 
able  to  work  a  compensatory  action  between  them.  There  is  an 
obvious  fallacy,  however,  in  reasoning  that  the  same  action  would 
go  on,  on  a  larger  scale  and  with  greater  efficiency,  if  the  differ- 


564  THE  PRINCETON  REVIEW. 

entiation  upon  which  the  interaction  depended  were  obliterated 
in  a  coinage  union  having  a  uniform  system. 

There  is  a  further  fallacy,  and  a  far  more  serious  one  from  a 
scientific  point  of  view,  in  supposing  that  the  coinage  union,  if 
extended,  would  gain  proportionate  increments  of  force  to  re- 
strain fluctuations  until  they  were  reduced  to  a  minimum  or  to 
nothing.  The  law  above  stated  here  comes  into  operation,  by 
virtue  of  which  a  combination  becomes  not  stronger,  but 
weaker,  as  it  is  extended,  and  the  attempt  of  all  nations  to  form 
a  corner  upon  the  falling  metal  would  dissipate  itself  like  a 
corner  which  united  all  the  buyers — that  is,  it  would  become 
simply  identical  with  demand  as  we  ordinarily  use  the  term. 
Instead,  therefore,  of  marching  towards  a  realization  of  bimetal- 
lism or  a  concurrent  circulation,  the  coinage  union  would  work 
towards  the  simple  free  play  of  natural  forces,  in  which  each 
metal  would  obey  its  own  conditions  of  supply  and  demand. 
Nor  is  this  all.  The  coinage  union  is  either  unnecessary^,  or  else 
it  is  needed  in  order  to  impose  a  set  line  of  action  and  to  enforce 
co-operation  where  voluntary  co-operation  would  not  be  given. 
How  can  any  one  believe  that  sovereign  nations  will  enter  into 
any  such  combination,  or  that,  if  they  did  enter  into  it,  they 
would  stay  in  and  obey  mandates  which  conflicted  with  their 
interest  and  will  ?  We  are  not  left  to  speculation  as  to  the  prob- 
ability that  they  would  so  act.  We  have  two  facts  to  which 
to  refer:  (i)  When  the  fall  in  silver  took  place,  the  Latin  Union 
would  have  been  disrupted  by  the  secession  of  Belgium  and 
Switzerland  if  the  coinage  of  silver  had  not  been  suspended. 
(2)  The  commissioners  of  the  Latin  Union,  at  their  last 
meeting,  agreed  that  Italy  should  withdraw  her  small  notes 
to  make  room  for  the  return  of  her  small  coin  with  which 
the  other  states,  especially  France,  were  burdened.  I  do  not 
understand  that  Italy  has  refused  to  do  this,  but  the  remon- 
strances which  were  made  in  the  Italian  Parliament  against  this 
dictation  as  to  what  Italy  should  do  with  her  own  currency 
were  just  what  must  be  expected  in  such  a  case,  and  they  show 
that  an  international  coinage  union  would  prove  a  rope  of  sand 
so  soon  as  the  attempt  was  made  to  make  it  efificient  at  all.  An 
international  coinage  union,  therefore,  to  accomplish  a  definite 
and  set  purpose  in  turning  back  a  movement  which  all  recognize. 


BIMETALLrSM.  565 

whether  they  deplore  it  or  not,  is  an  absolutely  impracticable 
scheme. 

3.  I  have  never  seen  any  argument  for  the  feasibility  of 
bimetallism,  or  a  concurrent  circulation,  in  which  the  whole  of 
both  metals  would  act  on  prices  and  credit,  except  the  facile 
inference  that  the  coinage  union  as  it  grew  larger  would  or 
might  restrain  fluctuations  more  and  more,  to  a  minimum  or  to 
nothing.  As  I  have  broken  down  every  assumption  here  in- 
volved, the  inference  falls  to  the  ground.  It  appears  that  this 
reasoning  follows  neither  a  true  relation  of  facts  nor  any  logical 
sequence.  The  coinage  union  as  it  grew  larger  and  larger  would 
grow  less  and  less  effective,  and  when  it  was  complete  it  would 
have  no  effect  at  all.  The  notion  of  a  concurrent  circulation  is 
therefore  entirely  baseless — snatched  from  the  air.  So  long  as 
the  natural  conditions  of  supply  and  demand  of  gold  and  silver 
remained  the  same,  whether  for  a  longer  or  shorter  period,  so 
long  the  forces  would  remain  the  same,  and  the  effects  would 
remain  the  same.  So  soon,  whether  sooner  or  later,  as  the  con- 
ditions varied,  the  forces  would  vary,  and  the  proportionate  ef- 
fects would  vary.  To  secure  a  concurrent  circulation,  then,  at 
a  fixed  ratio,  it  is  necessary  to  suppress  the  effects,  which  can 
only  be  done  by  suppressing  the  forces,  so  that  a  concurrent  cir- 
culation could  never  be  realized  until  we  could  extinguish  econo- 
mic forces  by  human  agency.  But  we  can  no  more  extinguish 
a  force  than  we  can  create  one,  so  that  this  scheme  is  in  econo- 
mics what  perpetual  motion  is  in  mechanics.  Every  analysis 
that  is  attempted  of  the  idea  will  only  issue  in  new  proof  that  it 
is  an  absurdity  which  cannot  be  thought,  and  it  is  no  longer 
strange  that  its  advocates  have  never  been  able  to  state  their 
notion  in  intelligible  language.  It  must  remain  vague,  shadowy, 
and  popular,  stated  at  best  in  symbols,  metaphors,  and  analogies, 
to  exist  at  all.' 

VII.  If  the  amount  of  space  which  would  be  required  were 
not  out  of  all  proportion  to  the  results  for  our  purpose,  I  should 

'  "  As  for  the  desire  which  has  been  expressed  that  the  hope  be  left  open  that 
some  day  a  fixed  relation  may  be  established  between  gold  and  silver  and  an 
international  value  given  to  them,  the  English  delegate  (Mr.  Goschen)  declared 
that,  in  his  view,  it  was  impossible  to  realize  this,  impossible  to  maintain  it  in 
theory,  and  that  it  was  contrary  to  the  principles  of  science."  (Report,  p.  166.) 
37 


566 


THE  PRINCETON  REVIEW. 


like  to  analyze  some  of  the  analogies  which  have  been  em- 
ployed in  this  discussion.  Some  of  them  deserve  to  be  put  into 
the  text-books  on  logic  as  classical  examples  of  the  mischief  of 
reasoning  by  analogy.  An  analogy  proves  nothing  whatever. 
It  only  serves  to  state  a  theorem  in  a  form  to  be  more  easily 
apprehended.  The  theorem,  then,  needs  to  be  proven  by  its 
appropriate  demonstration.  After  showing  the  mischievous 
character  of  the  notions  imported  into  this  discussion  by  the 
analogies  of  tubs  of  water  joined  by  a  tube,  and  horses  driven 
in  span,  I  should  not  have  advanced  the  discussion  in  which  I 
am  engaged.  The  bimetallist  says:  A  concurrent  circulation 
seems  to  me  like  driving  two  horses  in  span.  I  answer  :  To  me 
it  seems  like  yoking  the  sun  and  moon  together  to  facilitate  the 
reckoning  of  time  by  men  by  making  the  lunar  month  a  simple 
fraction  of  the  solar  year.  Nothing  is  accomplished  by  these 
statements  towards  testing  the  truth  of  either  opinion.  I 
therefore  pass  by  all  the  analogies  which  have  been  offered  by 
the  bimetallists  with  the  simple  remark  that  they  are  all  un- 
true and  misleading. 

The  advocates  of  the  goloid  dollar,  who  think  they  can  give 
greater  fixity  to  the  ratio  of  the  metals  by  mixing  them  in  the 
same  coin,  advocate  a  more  grotesque  absurdity,  but  not  a 
greater  one,  than  the  other  advocates  of  a  "  concurrent  circula- 
tion." 

VIII.  We  must  infer,  then,  that  gold  and  silver  will  both  be 
used  as  components  in  the  world's  money,  by  the  adoption  by 
some  nations  of  one  and  by  other  nations  of  the  other,  as  their 
convenience  and  interest  dictate.  The  United  States,  by  its 
legislation  so  far,  has  put  itself  on  the  way  to  become  one  of 
the  silver  countries.  It  is  not  a  dogmatic  judgment ;  it  is  infer- 
ence from  observation  of  the  course  adopted  by  nations,  that 
gold  is  more  convenient  for  the  purpose  of  the  leading  commer- 
cial nations,  and  silver  for  those  which  are  yet  behind.*  The 
United  States  is  one  of  those  whose  interests  require  the  use 
of  gold,  and  the  way  back  over  the  path  we  are  now  treading 
will  have  to  be  won  by  trouble,  loss,  and  inconvenience.  Our 
children,  instead  of  admiring  our  Quixotic  devotion  to  mankind 

'  Feer-Herzog.     Report,  p.  60. 


BIMETALLISM.    '     .    '  •  567 

in  general,  will  ask  us  how  we  could  ever  commit  the  folly  of 
plunging  into  a  difficulty  which  everybody  else  was  trying  to 
escape,  and  from  which  our  children  will  have  to  extricate  them- 
selves at  heavy  expense.  I  am  far  from  denying  that  the  change 
from  silver  to  gold  is  attended  by  loss  and  inconvenience,  but  I 
do  not  know  of  any  step  of  social  or  economic  advance  which  has 
ever  been  made  without  temporary  loss  and  inconvenience  both 
to  capital  and  labor,  and  the  United  States  were  not  exposed  to 
any  of  this  loss  at  all.  Mr.  Seyd  has  just  published  a  book, 
"  The  Decline  of  Prosperity,  and  its  Insidious  Cause,"  in  which, 
as  the  title  indicates,  he  takes  a  very  lugubrious  view  of  things, 
and  ascribes  the  mischief  to  the  demonetization  of  silver.  This 
fear  that  prosperity  was  declining  has  come  up  every  fifteen  or 
twenty  years  for  a  century  or  two,  especially  in  England,  and 
yet  prosperity  and  civilization  advance.  In  1872  coal  and  meat 
were  dear,  and  the  newspapers  were  filled  with  essays  about  the 
sufferings  of  the  people  on  fixed  incomes.  Then  the  woes  of 
the  agricultural  laborers  came  up,  and  the  farmers  were  rep- 
resented as  selfish  men,  gorged  with  wealth  and  prosperity. 
Now  meat  is  too  cheap,  the  turn  has  come  to  the  landowners, 
and  the  farmers  are  the  objects  of  public  concern.  Such 
changes  are  the  inevitable  effects  of  the  continual  changes  in 
the  conditions  of  industry  and  the  relations  of  commerce.  It 
is  from  and  by  means  of  such  changes  that  the  prosperity  of 
mankind  advances.  Every  great  improvement  involves  changes 
and  readjustments.  They  are  not  welcome,  but  they  are  un- 
avoidable. It  is  not  at  all  improbable  that  the  number  and 
variety  of  the  great  improvements  of  the  last  twenty  years,  fol- 
lowing so  rapidly  on  each  other,  crossing  and  combining  with 
each  other,  necessitating  quick  and  complicated  adjustments, 
may  go  for  a  great  deal  in  the  present  reaction.  It  is  very 
probable  that  the  next  twenty-five  years  are  to  see  massive 
migrations  of  population,  and  great  transfers  of  capital,  from  the 
old  to  the  new  countries,  which  will  not  be  made  until  suffering 
has  enforced  them.  It  is  probable  that  the  value  and  rent  of 
land  will  decline  in  the  old  countries  and  rise  in  the  new.  It  is 
possible  that  social,  economic,  and  political  changes-  are  to  be 
accomplished  such  as  we  cannot  yet  guess  at.     It  is  certain  to' 


568 


IHE  PRINCETON  REVIEW. 


my  mind,  however,  that  those  years  are  to  be  years  of  unprece- 
dented prosperity. 

The  fall  in  silver  has  its  share  in  the  temporary  disorder,  loss, 
and  suffering;  but  the  use  of  the  single  gold  standard  will  be  one 
of  the  strongest  supports  of  the  new  prosperity.  If  this  were 
not  so,  it  would  be  idle  to  lament  over  a  movement  which  comes 
along  in  the  natural  evolution  of  things.  To  try  to  stem  that 
movement  and  turn  it  back  to  the  old  system  of  repeated  em- 
pirical struggles  for  a  bimetallic  circulation,  it  would  be  neces- 
sary for  us  to  be  sure  of  three  things :  (i)  that  we  understand 
present  phenomena  thoroughly,*  (2)  that  we  can  foresee  the 
results  of  the  movement  towards  gold,  if  it  goes  on,  and  (3) 
that  we  are  sure  of  the  working  of  the  gigantic  experiment  in- 
volved in  the  attempt  to  secure  bimetallism,  or  the  alternate 
standard,  by  a  coinage  union.  These  conditions  are  absolutely 
unfulfilled.  On  the  contrary,  it  seems  that  international  bank- 
ing is  just  at  the  point  where  its  further  development,  and  the 
transfer  of  capital  from  old  to  new  countries,  above  alluded 
to,  require  an  international  standard  of  value  amongst  the  great 
commercial  nations  such  as  gold  alone  can  supply.  The  de- 
velopment of  international  banking,  in  its  turn,  will  economize 
the  use  of  gold,  and  thus  again  defeat  the  fears  of  those  who 
think  there  is  not  gold  enough.  The  movement,  therefore, 
bears  all  the  marks  of  a  true  organic  development,  in  which 
all  the  parts  contribute  to  and  support  each  other  iii  advance- 
ment to  a  higher  stage.  It  also  seems  to  me  that  the  fall  in 
silver  is  precisely  adapted  to  favor  those  extensions  of  com- 
merce and  civilization  which  lie  in  the  near  future.  South 
America  is  still  in  the  lowest  stage  of  economic  development, 
and  will  find  silver  its  best  money  for  a  long  time  to  come.  Asia 
is  scarcely  yet  upon  a  monetary  system,  except  where  Euro- 
peans have  penetrated,  and  can  use  nothing  but  silver  to  advan- 
tage for  an  indefinite  future.  Africa  is  an  almost  untouched 
continent,  which,  within  fifty  years,  will  probably  come  into  new 

'  The  authorities  are  by  no  means  agreed  as  to  the  causes  of  the  fall  of  silver. 
This  question  came  up  at  Paris,  and  Mr.  Feer-Herzog  maintained  that  the  key  to 
the  phenomenon  lay  in  the  state  of  the  East  Indian  exchanges.  (Report,  p.  58.) 
This  is  the  view  which  I  took  before  the  U.  S.  Silver  Committee  in  1876,  but  I 
have  never  seen  any  other  confirmation  of  it. 


BIME  TA  LLISM.  569 

relations  to  the  civilized  world.  Silver  is  the  only  suitable  me- 
dium for  this  extension  of  commerce.  As  far,  then,  as  we  can 
foresee,  the  cheapening  of  the  tool  of  exchange  by  which  these 
extensions  of  trade  and  civilization  must  be  carried  on  will  only 
facilitate  them ;  and  if  bimetallism  were  not  an  absurdity,  and 
the  alternate  standard  either  an  injustice  or  a  delusion,  and  if 
either  of  them  were  practicable,  the  adoption  of  either  would 
now  be  the  grandest  mistake  the  civilized  world  could  commit. 
I  attribute  no  weight  to  these  prognostications  of  mine.  It  is 
contrary  to  my  opinion  of  sound  procedure  in  such  matters  to 
make  them  at  all.  I  should  consider  it  the  most  vicious  pro- 
cedure to  make  such  prognostications  the  basis  of  argument 
that  any  nation  or  that  all  civilized  nations  "  ought"  to  use  the 
single  gold  standard.  The  economic  development  of  human 
society  must  go  on  its  way  and  work  out  its  results,  and  the  hu- 
man race  must  make  the  best  of  them.  The  race,  however,  does 
not  make  mistakes,  and  so  long  as,  in  all  its  parts,  it  obeys  the 
dictates  of  its  interests,  it  will  push  on  a  true  evolution  which 
cannot  but  serve  to  enhance  the  prosperity  of  the  race  as  a 
whole.  It  is  only  when  nations  allow  their  action  to  be  dic- 
tated by  speculations  about  the  future  of  civilization  and  hu- 
manity that  they  may  wreck  the  natural  development.  It  is 
because  these  terrors  about  the  future,  and  prophecies  of  disas- 
ter, have  been  introduced  to  play  so  great  a  rSle  on  the  other 
side  of  this  question  that  I  venture  to  set  against  them  the 
best  speculations  I  can  make  as  to  the  probable  course  of 
affairs. 


Postscript. — After  the  above  was  in  type  my  attention 
was  called,  by  an  editorial  in  the  New  York  Tribune,  to  a  recan- 
tation by  Mr.  Gibbs  of  the  opinions  maintained  by  him  at  the 
.Conference  at  Paris.  The  plan  of  my  article  was  to  make  an 
independent  discussion,  and  not  to  examine  the  literature  of  bi- 
metallism beyond  the  Report  of  the  Monetary  Commission. 
When,  however,  a  journal  which  has  sustained  a  uniformly 
sound  and  strong  position  on  monetary  questions  referred  to 
Mr.  Gibbs'  pamphlet  in  the  terms  used  by  the  Tribune,  it 
seemed  that  here  perhaps  a  bimetallist  might  at  last  be  found 


570 


THE  rRINCETON  REVIEW. 


who  had  some  clear  ideas,  and  could  state  them  so  as  to  bear 
examination.  I  therefore  hastened  to  secure  a  copy  of  Mr. 
Gibbs'  pamphlet,'  and  also  a  copy  of  his  letter  to  Cernuschi  an- 
nouncing his  conversion,  and  Cernuschi's  reply  to  the  same.' 
My  hopes  of  finding  something  in  these  pamphlets  solid  enough 
to  bear  examination  for  purposes  of  discussion  are  all  disap- 
pointed. 

Mr.  Gibbs  has  simply  gone  over  to  the  bimetallic  fallacy, 
and  accepted  it  in  its  grossest  and  crudest  form.  He  has  pro- 
duced no  new  arguments  for  it  and  refuted  no  objections  against 
it.  Incidentally  he  has  shown  that  the  ex-Governor  of  the  Bank 
of  England  holds,  in  regard  to  money,  all  the  fallacies  which 
constitute  the  premises  of  our  soft-money  men ;  and  if  he  does 
not  agree  with  them  in  their  conclusions,  it  is  only  because  he  is 
less  logical  and  consistent.  This,  however,  might  be  said  of  all 
bimctallists.  The  Tribune  s  estimate  of  this  pamphlet  adds  the 
greatest  possible  weight  to  the  motive  for  my  article  as  stated 
in  the  first  paragraph  thereof.  I  am  therefore  led  to  counteract 
that  estimate  by  amplifying  one  or  two  points  which  I  had 
passed  over  briefly,  and  by  inserting  one  or  two  which  I  had 
judged  better  to  omit,  in  order  to  iiiow  the  real  significance  and 
value  of  what  Mr.  Gibbs  has  contributed  to  this  controversy. 

I.  Mr.  Gibbs'  conversion  to  bimetallism  is  due  to  observa- 
tion of  the  losses  incurred  in  Indian  finances  and  Indian  trade. 
He  assumes  that  these  losses  are  due  to  the  fall  in  silver,  and  he 
attributes  the  fall  in  silver  to  demonetization.  Hence  he  ar- 
gues :  Remonetize  ;  that  will  restore  silver ;  that  will  stop  the 
losses.  It  is  a  pity  that  the  matter  is  not  so  simple.  I  con- 
sider it  an  error  to  attribute  the  losses  in  the  India  trade 
to  the  fall  in  silver.  The  fall  in  silver  is  not  a  cause,  but 
a  consequence.  The  financial  relations  between  England  and 
India  after  1870  took  such  shape  that  the  "  tribute,"  as  it  is 
called,  had  to  be  paid  by  an  excess  of  exports  over  imports  of 
India.  This  could  only  be  accomplished  by  a  fall  in  prices  in 
India,  Nevertheless  Europe  desired  to  continue  to  sell  silver 
to  India,  while  the    relation   just   mentioned    would    have  led 


'  "Silver  and  Gold,"  by  Henry  H.  Gibbs,  London,  1879. 

'  "  Bimetallism  in  England  and  Abroad,"  by  Henri  Cernuschi,  London,  1879. 


BIMETALLISM. 


571 


India  todesist  from  buying  it.  Instead  of  :s.faHm  prices  (silver 
remaining  stable)  there  therefore  has  occurred  the  exactly  equiv- 
alent phenomenon  of  a  fall  in  silver  zvitJioiit  any  rise  in  prices. 
In  countries  which  have  a  depreciated  paper  currency  prices  rise 
as  the  medium  falls,  and  so  the  foreign  trade  quickly  adjusts  itself. 
If  prices  had  risen  in  India  there  would  have  been  no  trouble  ; 
but  the  forces  which  would  have  forced  a  fall  in  prices  if  silver 
had  held  firm  have  prevented  a  rise  in  prices  while  forcing  a 
fall  in  the  medium.  A  crisis  in  the  Indian  exchanges  was 
therefore  inevitable  in  some  form  or  other.  Instead  of  taking 
place  through  prices,  it  has  taken  place  through  the  medium — 
silver — and  the  fall  in  silver,  is  a  consequence  and  not  a  cause. 
This  relation  of  facts  accounts  for  the  fall  in  silver,  and  nothing 
else  does.  The  silver  thrown  on  the  market  by  demoneti- 
zation and  by  a  somewhat  increased  production  (which  has 
been  greatly  exaggerated)  by  no  means  account  for  the  fall. 
The  increased  supply  fell  on  a  weak  market,  and  had  accessory 
influence,  but  it  does  not  suffice  to  account  for  the  principal 
effect.  It  follows  that  it  is  a  great  error  for  those  who 
suffer  from  losses  in  the  India  trade  to  ascribe  their  troubles  to 
the  fall  in  silver,  and  that  their  troubles  cannot  be  cured  by  any 
currency  devices.  While  India  has  so  much  interest  to  pay  in 
England  on  borrowed  capital,  to  which  she  has  not  yet  grown 
up,  and  while  she  has  to  pay  in  England  for  an  expensive  govern- 
ment, to  which  also  she  has  not  yet  grown  up,  she  will  be  a 
worse  country  to  sell  in  and  a  better  one  to  buy  in  than  for- 
merly. However,  if  English  merchants  and  bankers  interested 
in  the  India  trade  could  sell  their  silver  to  somebody  for  the  old 
price,  it  is  obvious  that  they  could  save  themselves  from  the 
effect  of  these  changed  circumstances  in  the  relations  of  the  two 
countries. 

2.  This  last  observation  leads  me  to  amplify  what  I  have  said 
under  VI.,  i.  I  have  shown  there  that  the  alternate  standard 
would  only  transfer  risks  and  losses  from  those  to  whom  they 
belong  to  somebody  else.  A  fortiori  bimetallism,  if  it  were 
practicable,  would  throw  all  risks  and  losses,  all  the  time,  on  the 
creditor  classes.  Gibbs  and  Cernuschi  seem  to  be  entirely  blind 
to  this  character  in  their  propositions,  and  they  do  not  see  that 
whatever  they  gain  for  some  must  either  be  won  out  of  others 


272  THE  PRINCETON  REVIEW. 

or  otit  of  nothing,  as  I  have  shown  in  my  main  argument.  To 
show  this  more  fully,  let  us  observe  the  difference  for  different 
classes  between  the  significance  of  a  fall  in  gold  and  the  signifi- 
cance of  a  fall  in  silver.  The  effect  of  a  fall  in  gold  (rise  in 
prices)  would  fall  on  annuitants,  pensioners,  owners  of  bonds, 
etc.,  beneficiaries  of  trusts  and  life  assurances,  salaried  and  pro- 
fessional men,  wage-receivers,  and,  generally,  on  all  who  have 
either  temporarily  or  permanently  fixed  incomes.  These  are 
the  persons  whom  I  designate  as  the  creditor  classes,  A  fall  in 
silver,  as  things  stood  in  1873,  affected  producers,  exchangers, 
and  bankers  in  certain  great  lines  of  business.  A  fall  in  gold 
would  therefore  affect  a  large  number  of  small,  weak,  and  scat- 
tered recipients  of  money  incomes,  belonging  to  different  classes 
and  having  no  co-operation  or  even  acquaintance  with  each 
other.  A  fall  in  silver  affects  great  "  interests,"  each  of  which 
is  marked  by  very  strong  cohesion  of  its  parts  within  itself,  and 
all  of  which  are  capable  of  sudden  and  easy  combination.  The 
former  have  little  power  or  chance  to  defend  themselves  ;  the 
latter  are  powerful  and  influential  in  speech,  writing,  and  legis- 
lation. The  former  never  attract  public  attention;  the  latter  fill 
the  public  eye  and  are  thought  of  whenever  money,  capital,  trade, 
or  industry  are  thought  of.  The  losses  of  the  latter  make  up  ap- 
palling figures  in  the  statistics  of  bankruptcy.  The  losses  of  the 
former  figure  in  no  statistics,  since  they  consist  in  privation,  mis- 
ery, disease,  and  earlier  death  for  those  affected  directly  and  for 
their  dependants.  The  losses  to  producers,  exchangers,  and  bank- 
ers are  what  govern  the  opinions  of  Mr.  Seyd,  and  now,  too, 
have  converted  Mr.  Gibbs.  It  is  indeed  cause  for  great  re- 
gret that  such  losses  should  occur,  and  if  there  were  any  means 
of  averting  the  loss  altogether,  the  matter  would  bear  a  very 
different  aspect.  But  there  is  no  such  means.  There  is  noth- 
ing possible  but  an  alternative,  either  to  leave  the  losses  where 
they  fall  by  the  circumstances  of  the  case,  or  to  throw  them  on 
somebody  else ;  and  nothing  is  proposed  in  these  monetary 
schemes  save  to  throw  the  losses  on  those  who  would  have  suf- 
fered if  the  fall  had  been  in  gold  instead  of  in  silver.  Now  when 
gold  has  fallen  (prices  have  risen),  notably  in  1 870-1 873,  the 
classes  who  were  affected  had  to  make  the  best  of  it  without 
aid  from  those  interested  in  silver,  and   so  the  prqoosition  that 


BIMETALLISM. 


573 


England  shall  now  adopt  bimetallism,  when  stripped  of  all  dis- 
guises, is  simply  another  case  of  the  old  abuse  whereby  a  few 
strong,  well-organized  interests,  acting  through  currency  legisla- 
tion, play  at  "  heads  I  win,  tails  you  lose"  with  the  large,  scat- 
tered, unorganized  mass  of  the  nation.  English  statesmen  may 
possibly  upset  the  monetary  basis  on  which  all  relations  of  prop- 
erty and  credit  in  England  rest,  in  order  to  alleviate  a  temporary 
strain  on  some  branches  of  foreign  trade,  and  on  the  finances 
of  India;  but  those  who  have  to  rely  on  American  newspapers 
for  their  information  and  impressions  of  what  is  likely  to  be 
done  in  this  matter  in  Europe  will  do  well  to  nourish  an  active 
incredulousness.  Those  Americans  who  have  to  rely  on  the 
Hon.  W.  D.  Kelly's  reports  of  interviews  between  himself  and 
Bismarck  for  judgments  as  to  the  probable  course  of  Germany 
will  do  well  to  allow  for  other  elements  in  the  report  than  the 
probable  power  of  Mr.  Kelly  to  inspire  the  Prince  with  expan- 
sive and  familiar  confidence.  Mr.  Kelly  is  a  man  of  enthusias- 
tic imagination,  and  it  appears  probable  that  he  and  Mr.  George 
Walker  are  just  the  kind  of  men  to  excite  the  well-known  pro- 
pensity of  the  German  Chancellor  to  befool  people  by  an  osten- 
tatious and  effusive  frankness  while  laughing  at  them  in  his 
sleeve.  A  great  deal  has  been  said  about  the  zeal,  dogmatism, 
and  fanaticism  of  the  advocates  of  the  single  universal  gold 
standard.  I  do  not  know  who  these  persons  are,  nor  what  they 
have  done.  The  only  persons  who,  in  regard  to  this  monetary 
question,  have  organized  a  sect,  adopted  a  creed,  undertaken  a 
propaganda,  and  sent  out  missionaries,  so  far  as  I  know,  are  the 
bimetallists.  It  is  charitable  to  believe  that  they  do  not  seethe 
political  and  social  significance  of  their  propositions,  but  that 
statesmen  will  not  see  this  long  before  action  is  adopted  is  very 
improbable. 

Now  Mr.  Gibbs  has  just  found  out  that  the  trade  between 
India  and  England  is  barter.  He  is  astonished  and  alarmed  at 
this.  He  thinks  this  kind  of  trade  uncivilized  and  attended  by 
loss  to  England.  He  attributes  the  evil  to  English  gold  mono- 
metalhsm,  and  thinks  that  the  evil  effects  have  been  counter- 
acted until  recent  years  by  the  French  law.  If  it  be  true,  how- 
ever, as  Mr.  Gibbs  and  the  other  bimetallists  argue,  that  France 
has  done  this  service  by  her  law,  now  to  gold-using  Englishmen 


574  THE  PRINCETON  REVIEW. 

and  now  to  silver-using  Germans,  then  France,  through  her 
creditor  class,  has  borne  burdens  and  losses  which  belonged  to 
other  people.  Such  being  the  case,  we  could  see  why  English- 
men and  Germans  should  want  the  French  law  to  continue,  but 
we  should  also  see  why  Frenchmen,  so  soon  as  they  understood 
it,  would  certainly  want  it  to  stop ;  and,  if  universal  bimetalhsm 
could  be  or  should  be  established,  the  next  question  would  be. 
What  class,  under  the  new  system,  is  to  take  the  place  formerly 
filled  by  the  French  creditor  class  and  bear  the  burdens  formerly 
borne  by  them  ? 

Such  is  the  inference  from  Mr.  Gibbs'  premisses,  but  the 
premisses  are  false.  Trade  with  India  is  barter,  but  so  is  all 
trade,  and  foreign  trade  most  plainly.  The  trade  for  silver  has 
involved  inconveniences  which  will  exist  until  all  the  world  uses 
a  single  and  universal  standard  of  value.  This  inconvenience 
has  been  paid  for,  as  all  other  hindrances  and  difticulties  of  trade 
are  paid  for,  in  prices.  The  French  mint  law  has  had  nothing 
to  do  with  it.  Finally,  the  French  creditors  have  lost  whenever 
the  ratio  of  the  metals  has  varied  so  as  to  change  the  metal  of 
the  French  coinage.  This  loss,  however,  has  been  borne  once 
for  all ;  it  has  not  continued  after  prices  have  been  readjusted  ; 
and  has  not  therefore  been  constant  under  the  operation  of  the 
double  standard. 

Cernuschi,  in  his  reply  to  Gibbs,  gives  far  more  gross  expres- 
sion to  the  same  fallacy  about  the  operation  of  the  French  law 
to  prevent  losses ;  for  he  attaches  it  not  to  English  traders, 
but  to  all  metal  producers.  "At  the  time  of  the  French  15^' 
the  position  of  the  producers  of  gold  and  silver  was  this-  all 
their  produce  had  by  law  an  unfailing  and  insatiable  customer 
—the  mint.  No  price  to  haggle  about,  no  competition  possible." 
A  customer  by  law  !  The  mint  a  customer !  ?  In  some  large 
establishments,  as  a  check  on  salesmen,  one  person  is  stationed 
at  a  counter  to  weigh,  measure,  and  count  all  goods  for  which 
the  salesmen  have  made  bargains  with  the  customers.  It  would 
be  as  sensible  to  call  this  person  the  "  unfailing  and  insatiable 
customer"  for  all  the  goods  sold  in  the  establishment  as  to  call 
the  mmt  a  customer  for  gold  and  silver.  This  gross  error,  how- 
ever, IS  the  cloak  which  covers  the  fallacy  and  the  injustice  of 
bimetalhsm.     The  law  does  provide  a  customer,  but  it  is  not  the 


BIMETALLISM. 


575 


mint.  It  is  the  creditor  class  as  above  defined.  There  is  "  no 
price  to  haggle  about  and  no  competition  to  fear"  because  the 
law  has  delivered  the  victim  over  helpless,  all  the  more  helpless 
because  he  is  ignorant,  the  law  having  concealed  the  transaction 
under  mysteries  of  coinage  and  money.  This,  however,  is  the 
most  direct  condemnation  of  the  law  itself,  as  well  in  an  economic 
as  a  social  or  pohtical  point  of  view.  It  is  a  fallacy  to  think  the 
mint  law  has  secured  the  producers  of  the  metals  against  loss 
and  haggling  and  competition — that  is,  against  all  the  inevitable 
annoyances  of  industry  without  hurting  anybody  else  ;  and  it  is 
an  injustice  to  take  the  annoyances  from  one  industry  only  to 
spread  them  over  others.  I  do  not  like  to  say  anything  which 
may  appear  arrogant  and  unbecoming,  but  I  feel  justified  in 
protesting,  in  the  name  of  all  that  scholars  and  scientific  men 
respect,  that  a  man  who  calls  the  mint  an  "  unfailing  and  insa- 
tiable customer"  does  not  deserve  respectful  treatment  in  the 
arena  of  scientific  discussion. 

Mr.  Gibbs  sees  that  bimetallism  involves  depreciation,  but  he 
thinks  the  evils  of  it  are  in  this  case  more  nominal  than  real. 
The  only  distinction  which  men  generally  make  between  nomi- 
nal evils  and  real  evils  is  that  my  evils  are  real  and  yours  are 
nominal ;  but  that  is  not  a  valid  distinction  which  science  or  jus- 
tice can  recognize.  Mr.  Gibbs  seems  to  think  the  evils  of  de- 
preciation nominal  because  they  would  be  widely  scattered  and 
much  concealed,  as  I  have  shown  above.  All  evils,  however,  are 
real  to  those  who  suffer  them.  If  they  come  from  nature,  like 
blight,  drought,  storms,  inundations,  and  other  calamities,  they 
must  be  borne  as  philosophically  as  possible.  If  they  are  in- 
flicted by  legislation,  or  are  transferred  by  legislation,  nothing 
can  justify  or  belittle  them.  Mr.  Gibbs  wants  silver  remone- 
tized,  not  at  its  present  market  value,  but  at  the  point  where  it 
will  be  when  the  bimetallic  system  shall  have  operated  on  it. 
He  has  not  comprehended  the  full  problem  which  he  has  to 
solve.  It  is  this:  (i)  If  in  England,  for  instance,  silver  is  rated 
at  its  present  market  value,  all  the  silver  now  in  England  loses 
20  per  cent  of  its  present  value.  (2)  If  silver  is  rated  at  the 
point  to  which  the  bimetallic  system  will  bring  it  up,  no  one  but 
Cernuschi  knows  where  that  will  be.  If  a  guess  is  made,  and 
silver  is  rated  above  the  market,  no  debtor  will  want  it,  and  so 


576  THE  PRINCETON  REVIEW. 

the  bimetallic  system  will  never  begin.  (3)  If  silver  is  rated  at 
the  market  to  begin  with,  and  if  the  mint  ratio  is  advanced  as 
the  market  ratio  advances  (assuming  that  bimetallism  would 
work),  then  continual  recoinage,  with  heavy  expense  and  endless 
confusion,  will  result.  I  hope  that  it  is  plain,  then,  that  the  bi- 
metallists  of  every  grade  and  description  are  either  trying  to 
transfer  losses  from  one  group  of  men  to  another,  or  else  trying 
to  make  something  out  of  nothing. 

3.    It  also   seems  desirable  to  notice   another  error  of   bi- 
metallism which   I   had  passed   over;    that   is  the   notion  that 
demand  due  to  a  fall   in   price    raises  price.     This  doctrine  is 
essential  to  the   bimetallic  theory,  and   it    has  been   carelessly 
conceded  by  some  who  are  not  bimetallists.     I  passed  over  it  in 
the  body  of  my  article  because  it  is  the  fallacy  of  that  extreme 
form  of  bimetallism  in  which  it  is  believed    that   the  coinage 
union  will  lock  the  two  metals  so  tight  together  that  they  will 
never  separate  from  the  legal  ratio  any  more,  because  there  will 
be  no  one  to  whom  to  sell  the  rising  metal.     Every  bimetallist 
would  be  driven  to  this  doctrine  if  he  followed  out  his  notions 
consistently ;  but  the  bimetalHsts  repudiate  it  generally  when  it 
is  ascribed  to  them.     Mr.  Gibbs,  however,  explicitly  accepts  this 
notion,  and  assumes  that  the  bimetallic  union  would  lock  the 
two  metals  permanently  together  as  such  an  undoubted  fact 
that  it  is  his  chief  rehance  for  refuting  objections.    Demand  due 
to  a  fall  in  price  tends  to  sustain  price  at  the  lower  level,  but  not  to 
raise  price,  since  such  demand  ceases  when  the  price  rises.     If 
we   have  a   bimetallic  circulation  at   15^  to    i,  debtors  do  not 
want  silver  at  or  below  15^  to  i,  but  only  below.     Their  demand 
will  only  act  on  it  so  long  as  it  stays  below  ;  therefore  their 
demand  never  can  lift  it  again  to  15^  to  i.     But  meanwhile  their 
demand  is  acting  to  sustain  it  only  by  absorbing  any  new  supply 
through  real  purchases.  So  long,  therefore,  as  there  is  a  new  supply, 
the  price  must  remain  below  15^  to  i,  and  that  new  supply  must 
be  absorbed.     But  this  is  destroying  the  bimetaUic  and  concur- 
rent circulation  just  so  far  as  it  goes  on.     The  bimetallists  seem 
to  think  that,  if  silver  fell,  the  debtors  of  the  world  would  all 
pounce  upon  it  so  unanimously  and  immediately  that  it  would 
not  fall.     This  is  absurd  in  the  statement,  and  it  is  absurd  in 
every  detail  of  fact.     New  silver  does  not  rain  down  in  an  equal 


BIME7ALLISM. 


577 


deposit  over  the  earth.  It  comes  into  human  society  at  certain 
points.  Hence  the  world-wide  demand  cannot  be  concentrated 
on  it.  Any  demand  which  does  act  on  it  can  do  so  only  by  real 
transactions  under  price  fluctuations.  This  fallacy,  therefore, 
reminds  us  again  of  perpetual  motion,  wherein  it  is  believed 
that  we  can  get  effect  out  of  a  force  without  action,  reaction, 
and  "  escapement." 

4.  To  meet  another  point  somewhat  more  explicitly  than  I 
have  done  it  above,  let  me  say  that  if  any  nation  which  now 
uses  gold  finds  that  its  interests  are  not  served  thereby,  and 
thinks  that  silver  would  serve  them  better,  it  has  only  to  make 
the  experiment  on  its  own  risk  and  responsibility.  If  it  suc- 
ceeds, others  will  imitate  it,  and  the  inferences  now  made  from 
the  past  action  of  nations  will  have  to  be  modified.  So  far  the 
nations  have  always  acted  as  if  they  knew  they  were  about  to 
commit  folly  and  incur  loss  whenever  they  have  taken  up  any 
projects  about  silver,  and  they  have  insisted  on  first  joining 
hands  so  as  to  all  go  into  the  evil  together.  We  wait,  then,  for 
the  first  nation  to  give  up  gold  and  take  silver  because  it  thinks 
silver  will  serve  its  interest  and  convenience  better.  Mr.  Gibbs 
is  as  anxious  lest  England  should  become  a  silver  nation  as  any 
"gold  monometallist"  possibly  could  be. 

5.  If,  then,  we  are  asked  which  nations  will  take  gold  and 
which  silver,  and  why  any  should  take  silver,  and,  if  none  take 
silver,  where  gold  enough  is  to  come  from,  we  answer :  (i)  That 
it  is  not  possible  or  necessary  to  tell  a  priori  who  will  take  silver 
and  who  gold.  (2)  All  would  prefer  gold,  and  the  world  will 
probably  ultimately  come  to  use  only  a  single  universal  standard 
of  value,  just  as  it  probably  will  come  to  use  single  and  uni- 
versal standards  of  weights  and  measures.  This,  however,  is  only 
an  anticipation  which  it  must  be  left  to  time  and  the  develop- 
ment of  civilization  to  realize.  At  present  it  has  no  importance. 
If  it  is  a  correct  anticipation  it  is  fruitless ;  if  it  is  an  incorrect 
anticipation  it  is  harmless.  (3)  If  it  is  said  that  "there  is 
not  gold  enough,"  that  assertion  is  senseless  unless  we  add  : 
"  to  sustain  prices  and  credits  at  their  present  level."  If, 
then,  there  is  not  enough,  in  this  sense,  the  nations  will  com- 
pete for  gold  until  those  to  whom  its  advantages  are  worth 
most  get  it,  because  they  give  most  (goods)  for  it.     Others  will 


578  THE  PRINCETON  REVIEW. 

drop  out  of  the  competition  for  gold  and  take  silver  when- 
ever its  comparative  cheapness  more  than  counterbalances  its 
inferior  utility.  So  then,  if  there  is  not  enough  gold,  we  will 
use  silver,  and  those  will  take  some  silver  who  think  it  for  their 
interest,  all  things  considered,  so  to  do. 

William  G.  Sumner. 
October  25,  1879. 


March,  188L 


THE  ARGUMENT  AGAINST   PROTECTIVE  TAXES. 

THE  most  absurd  assertion  which  can  be  put  into  language 
is  that  a  thing  {e.g.,  free  trade)  is  true  in  theory  but  is  false 
in  practice.  For,  if  free  trade  is  not  true  in  practice,  something 
else,  viz.,  restricted  trade,  is  alleged  to  be  true  and  beneficial  in 
practice.  It  will  therefore  be  a  matter  of  scientific  investigation 
to  find  out  how  restriction  acts,  what  forces  it  brings  into  action, 
what  are  the  laws  of  those  forces,  what  are  the  conditions  of 
successful  restriction,  etc.  etc. — in  short,  to  find  out  the  theory 
and  philosophy  of  restriction.  The  theory  thus  found  will  be 
"  true"  because  deduced  from  observation  and  ratified  by  experi- 
ence. But  it  was  conceded,  at  the  outset,  that  free  trade  is  true 
in  theory.  Hence  it  would  follow,  if  free  trade  is  true  in  theory 
but  not  in  practice,  that  two  opposite  and  contradictory  propo- 
sitions about  the  same  subject-matter  could  both  be  true  at  the 
same  time.  This  is  the  height  of  absurdity.  Any  one,  there- 
fore, who  makes  this  assertion  is  either  guilty  of  very  loose 
thinking,  or  else  he  seeks  an  escape,  at  all  hazards,  from  rational 
conclusions  against  which  he  can  no  longer  contend. 

There  remain  two  possible  positions  which  a  protectionist 
may  assume : 

I.  He  may  boldly  declare  that  there  is  a  science  of  wealth 
based  on  restriction ;  that  he  can  discover  the  principles  of  it 
and  reduce  them  to  a  theory ;  that  trade  between  countries  is  a 
mischievous  thing,  at  least  if  it  runs  on  parallels  of  latitude ;  that 
isolation  and  antagonism  of  nations  is  the  law  of  nature  upon 
which  wealth  and  civilization  depend ;  that  there  is  therefore  no 
universal  science  of  wealth,  but  only  a  national  science  of  wealth, 
and  that  this  science,  in  its  final  analysis,  is  only  a  generalization 
from  certain  empirical  maxims  of  economic  policy.     This  is  the 


242  THE  PRINCETON  REVIEW. 

position  of  the  dogmatic  or  philosophical  protectionists,  who 
seek  to  give  a  certain  abstract  and  philosophical  cast  to  their 
speculations.  It  is  the  position  of  the  List-Carey  school,  whose 
"  unscientific  science  and  unhistorical  history"  (as  Roscher  called 
it)  seems  to  impose  with  such  weight  on  some  people.  It  is  a 
view  of  the  matter  which  is  especially  cultivated  now  by  the 
learned  protectionists  of  Germany,  and  which  issues  in  some  of 
the  most  remarkable  curiosities  of  economic  Hterature  which 
have  ever  been  produced  either  by  the  learned  or  the  unlearned. 

2.  The  other  ground  which  the  protectionist  may  take  is  that 
protection  does  not  increase  wealth,  but  is,  for  some  reason  or 
other,  expedient. 

In  taking  up  again  now  the  effort  to  put  into  simple,  brief, 
and  comprehensive  form  the  argument  against  protection,  I  will 
separate  these  two  modes  of  defending  protection  and  take  them 
in  order.  It  is  obvious  that  the  two  positions  are  inconsistent 
with  each  other,  and  every  one  who  is  familiar  with  the  history 
of  this  controversy  knows  that  its  fruitlessness  has  been  due,  in 
a  large  measure,  to  the  ambiguities,  false  definitions,  and  confu- 
sion which  have  prevailed  in  it.  It  has  been  a  constant  phe- 
nomenon in  the  discussion  that  the  expediency  of  protection,  in 
spite  of  the  harm  done  by  it,  has  been  argued,  and  then  the 
general  utility  of  protection  has  been  assumed  as  resulting  from 
the  argument.  I  do  not  know  of  any  disputant  on  the  protec- 
tionist side  who  does  not  move  from  one  to  the  other  of  these 
positions,  as  his  convenience  or  the  pressure  of  the  argument 
may  force  him,  or  who  does  not  confuse  them  with  each  other. 

It  will  be  noted  also  that  my  point  of  attack  is  protection  un- 
der any  form  or  in  any  degree,  and  not  import  duties  or  taxes 
on  consumption.  This  distinction  can  perhaps  best  be  brought 
out  by  examining  one  of  the  peculiar  and  whimsical  notions 
which  avail  to  keep  people  from  actually  examining  the  matter 
in  issue,  viz.,  the  notion  of  "  revenue  tariff  with  incidental  pro- 
tection." The  people  who  believe  that  this  jingle  of  words  has 
any  meaning  in  it  must  believe  that  the  same  man  in  supplying 
his  needs  does  it  at  the  same  time  in  two  ways,  by  importing 
and  by  buying  at  home  too.  If  A  wants  a  ton  of  iron  and  im- 
ports it,  he  pays  duties  on  it  which  go  to  the  public  treasury. 
Not  a  cent  for  this  transaction  goes  to  the  American  producer 


THE  ARGUMENT  AGAIN  SI    PROTECTIVE   TAXES.         245 

of  iron.  This  is  why  the  American  producer  is  so  often  heard 
^o  cry  out  in  horror  at  the  amount  imported.  If  B  wants  a  ton 
of  iron  and  buys  it  at  home,  he  pays  the  protective  taxes  to  the 
home  producer,  and  not  a  cent  goes  in  revenue  to  the  public 
treasury  for  that  transaction.  What  incidental  relation  exists 
between  these  two  transactions  ?  They  are  independent  and 
exclusive  of  each  other.  If  we  discard  the  empty  formula  of 
•'  revenue  with  incidental  protection,"  we  find  that  we  are  sim- 
ply face  to  face  with  the  problem  of  free  trade  vs.  protection,  or 
revenue  vs.  protection,  as  in  the  first  place.  Nothing  has  been 
done  by  this  formula  towards  solving  either  of  those  problems. 
A  only  wanted  one  ton  and  took  one  way  of  getting  it.  B 
only  wanted  one  ton  and  took  another  way  of  getting  it.  The 
question  why  either  of  them  chose  the  course  he  did  choose, 
and  what  the  effects  were  on  the  interests  of  either  of  them,  and. 
on  the  welfare  of  the  country,  of  the  tax  laws  in  question,  re- 
mains still  all  before  us.  What  is  clear  is  only  that  protection 
and  revenue  are  exclusive  of  each  other.  They  do  not  overlap 
•each  other  at  all.  The  line  between  them  is  sharp  and  precise, 
and  we  can  discuss  the  wisdom  of  protection  entirely  aside  from 
the  wisdom  of  raising  revenue  from  customs  duties.  The  latter 
question  shall  not  therefore  now  be  taken  into  account,  and  we 
confine  our  attention  only  to  the  former. 

In  this  connection  we  may  also  dispose  of  another  of  the 
glib  commonplaces  by  which  people  get  rid  of  the  trouble  of 
thinking  about  the  tariff  controversy  :  that  we  have  a  large  debt 
and  therefore  must  have  a  high  (protective)  tariff.  It  is  evident, 
since  protection  and  revenue  exclude  each  other,  that  not  one 
cent  which  is  paid  in  a  protective  tax  goes  into  the  public  treas- 
ury or  helps  to  pay  either  the  principal  or  the  interest  of  the 
debt,  while,  on  the  other  hand,  every  cent  paid  in  protective 
taxes  lessens  the  power  of  the  citizen  to  pay  revenue  taxes  for 
the  discharge  of  the  public  burdens.  Hence  the  fact  that  we 
have  heavy  public  burdens  is  just  the  reason  why  we  cannot 
afford  to  squander  our  means  in  paying  taxes  to  our  neighbors 
for  carrying  on  (as  they  themselves  allege)  unproductive  indus- 
tries. The  especial  iniquity  of  the  present  tariff,  in  a  political 
point  of  view,  is  that  it  was  laid  under  the  cover  of  war  taxes, 
taking  advantage  of  the  popular  ignorance  of  the  relation  be- 


244  THE  PRINCETON  REVIEW. 

tween  protection  and  revenue,  and  of  the  popular  willingness 
to  submit  to  taxation  for  the  purpose  of  the  war.  To  argue 
that  we  want  protective  taxes  because  we  have  a  large  debt  to 
pay  is  Hke  arguing  that  a  man  ought  to  squander  his  income  in 
benevolence  because  his  means  are  just  now  being  strained  by 
an  expensive  lawsuit. 

Having  disposed  of  these  notions  which  interfere  with  the 
approach  to  the  real  merits  of  the  question,  we  may  consider 
first  whether  protection  can  increase  the  wealth  of  the  country. 

I.  The  problem  of  economic  science  is  presented  in  the  ratio 
between  the  efforts  which  men  have  to  exert  to  supply  their 
material  needs  and  the  amount  and  excellence  of  the  food,  cloth- 
ing, lodging,  furniture,  fuel,  etc.,  which  they  obtain.  Political 
economy  investigates  the  laws  which  govern  this  ratio  so  as  to 
lind  out  how  we  may  determine  the  ratio  as  much  as  possible  in 
our  favor.  Throwing  aside  all  technicalities,  the  case  is  to  find 
out  how,  for  a  given  exertion  and  sacrifice,  to  get  the  maximum 
of  material  good.  I  maintain  against  any  system  of  restriction 
whatsoever  that  it  renders  that  ratio  less  favorable  to  men  than 
it  would  be  under  freedom,  taking  the  arts  and  sciences,  the  land 
and  the  population,  as  they  are  in  the  country  where  restriction 
is  applied.  Instead  of  increasing  wealth,  it  is  mathematically 
demonstrable  that  it  lessens  wealth,  makes  it  harder  to  get  a  liv- 
ing and  lowers  the  comfort  of  the  population,  and  that  it  does 
this  by  taking  away  one  man's  earnings  to  give  them  to  another. 
I  mean  to  say  that  a  man  must  work  harder  and  longer  to  get  a 
given  amount  of  product  under  protection  than  under  free  trade, 
and  I  mean  to  say  that  this  state  of  things  is  due  to  the  statute 
law,  which  steps  in  and  takes  away  part  of  his  product  and  gives 
it  to  another  man.  The  issue  is  purposely  stated  here  without 
the  use  of  any  of  the  technical  terms  of  political  economy,  be- 
cause the  simpler  and  homelier  the  language  is  the  more  cor- 
rectly does  it  state  the  question,  both  in  its  economic  and  its 
political  aspects,  both  in  its  scientific  and  in  its  popular  signifi- 
cance, free  from  all  admixture  of  either  sentimental  or  pedantic 
rubbish.  The  economic  question  about  the  tariff  is:  Does  it 
enable  the  population  of  the  country  to  command  greater  mate- 
rial good  for  a  given  effort  ?  The  political  question  about  pro- 
tection is :  Does  the  statute  enacted  by  the  legislature  alter  the 


THE  ARGUMENT  AGAINST  PROTECTIVE  TAXES.        245 

distribution  of  property  so  that  one  man  enjoys  another  man's 
earnings?  Has  the  state  a  law  in  operation  which  enables  one 
citizen  to  collect  taxes  of  another?  The  scientific  question  about 
protection  is :  Does  it  lessen  the  ratio  of  effort  and  sacrifice  to 
comfort  and  enjoyment  ?  The  popular  question  about  protection 
is :  Does  it  prevent  me  from  supporting  myself  and  family,  by  my 
labor,  as  well  as  I  could  do  it  if  there  were  no  protective  taxes? 

The  philosophical  protectionists  at  once  reply  that  this  is 
not  the  question,  or  at  least  not  the  whole  of  it.  To  them  po- 
litical economy  is  not  an  independent  science.  They  are  not 
willing  to  consider  the  question  of  wealth  aside  from  other 
things.  They  want  to  embrace  in  the  view  what  they  call 
moral,  political,  social,  aesthetical,  and  sentimental  considera- 
tions. Their  instinct  is  perfectly  correct  when  they  oppose 
those  operations  of  analysis  and  classification  which  would  in- 
troduce clearness  and  precision  into  the  discussion.  The  part 
of  social  science  which  has  the  most  positive  and  mathematical 
character  is  the  one  against  which  they  cannot  stand.  They 
write  no  books  on  political  economy,  but  always  on  social  sci- 
ence, in  order  to  keep  the  clear  mixed  with  the  unclear,  the 
physical  with  the  metaphysical,  the  positive  with  the  arbitrary. 
They  are  eagerly  followed  by  all  the  popular  orators  and  writers 
on  economic  questions,  and  generally  by  those  metaphysicians 
and  students  of  other  sciences  who  take  part  in  sociological  dis- 
cussions, and  almost  always  prove  themselves  the  most  reckless 
dogmatizers  when  they  do  so.  The  attraction  of  the  a  priori 
method,  and  of  abstract  and  general  propositions  for  ill-trained 
men,  is  well  known,  and,  generally,  in  proportion  as  one  is  un- 
trained in  a  particular  science  (whatever  may  be  his  status  in 
others)  will  be  his  readiness  to  fly  to  a  priori  methods  and  to 
dogmas  which  are  conveniently  vague,  loose,  and  broad,  when 
he  engages  in  the  discussion  of  questions  appertaining  to  the 
science  in  which  he  has  not  been  trained. 

Mr.  Carey,  for  instance,  filled  his  books  with  vague  diatribes 
about  "association."  He  thought  to  have  found  a  great  prin- 
ciple under  this  name.  He  wanted  to  break  off  all  the  natural 
ties  and  bonds  of  mankind  in  order  to  piece  the  parts  together 
again  on  a  plan  of  his  own.  He  accordingly  wrote  big  books 
on  "social  science,"  and  he  never  reached  the  first  conception  of 
17 


246  THE  PRINCETON  REVIEW. 

the  forces  which  may  truly  be  called  social,  or  the  laws  by  which 
they  act.  He  and  his  school,  in  this  country  and  in  Germany, 
have  never  learned  to  see  the  great  bonds  of  human  society  which 
are  developed  by  intercourse  and  communication,  which  hold 
the  nations  to  a  mutual  giving  and  taking  as  they  grow  in  civili- 
zation, which  are  stronger  in  proportion  as  they  are  natural, 
informal,  impersonal,  spontaneous,  and  in  comparison  with 
which  all  artificial  co-operation  is  ridiculously  insignificant.  For 
our  present  purpose,  however,  the  thing  to  note  is  that  social 
speculations  and  sociological  investigations  have  nothing  what- 
ever to  do  with  the  tariff  for  protection.  They  only  obscure  and 
confuse  the  tariff  question.  If  we  should  classify  them  we  should 
find  that  they  are  either  broader  generalizations  which  flow  neces- 
sarily from  sound  economic  principles,  and  so  can  be  left  to  take 
care  of  themselves  while  the  economic  investigations  are  going 
on  ;  or  else  they  are  sociological  doctrines  which  are  parallel 
with  sound  economic  doctrines,  but  which  are  most  successfully 
pursued  in  special  investigations;  or  else  (which  is  by  far  the 
largest  class)  they  are  sentimental  whims,  popular  notions,  and 
metaphysical  dogmas,  which  are  not  true,  or  at  best  are  only 
half  true,  but  which  cannot  be  refuted  without  allowing  the  dis- 
cussion to  fritter  itself  away  in  innumerable  side  issues.  We 
have  to  understand  that  an  economic  investigation  may  be  car- 
ried on  just  as  independently  as  a  chemical  or  physical  or  bio- 
logical investigation.  The  economist  does  not  need  to  be  on 
the  lookout  all  the  time  to  correct  his  results  by  reference  to 
some  outside  considerations,  or  to  the  dogmas  of  jejune  and 
rickety  systems  of  metaphysical  speculation.  On  the  contrary, 
he  should  regard  the  introduction  of  extraneous  elements,  no 
matter  under  what  high-sounding  names,  of  moral,  political,  and 
social,  as  sure  signs  of  impending  confusion  and  fallacy,  and  he 
should  especially  repel  any  attempt  to  measure  and  criticise  his 
results  by  the  facile  generalizations  of  a  priori  speculation.  So 
much  being  here  briefly  set  out,  we  may  devote  ourselves  to  the 
question  of  protection  as  a  question  of  wealth  and  pohtical  econ- 
omy only,  as  above  described. 

Let  us  take  the  case  of  a  new  country.  It  is  claimed  that  a 
•new  country  needs  protection  in  order  to  get  a  start.  Mill 
seemed  to  make  some  concession  to  this  case.     I  have  heard  a 


THE  ARGUMENT  AGAINST   PROTECTIVE   TAXES.         2\1 

man  who  was  not  a  protectionist  and  who  was  a  professional 
economist  say  that  he  thought  a  new  colony  might  get  into  a 
situation  in  which  it  might  need  a  lift  to  move  it  on  in  the  way 
of  growth.  I  will  take  up  this  latter  view  of  the  matter  for  dis- 
cussion because  it  is  the  case  which,  if  disproved,  will  a  fortiori 
carry  all  the  other  forms  of  this  claim  with  it. 

I  pass  over  the  practical  difficulty  involved  in  the  question 
who  is  to  decide  when  the  juncture  supposed  has  come  about, 
and  who  is  to  prescribe  or  give  the  lift ;  I  pa-ss  over  the  unsci- 
entific and  incorrect  conception  of  econonic  forces  involved  in 
the  hypothesis  that  a  nation  can  get  into  any  such  position,  and 
also  in  the  notion  of  a  "  Hft"  to  be  given  to  a  nation,  in  order 
that  I  may  come  to  the  real  test  of  the  remedy  proposed,  if  the 
case  could  arise,  and  if  the  remedy  were  practically  available.  It 
is  evident  that  a  protective  tariff  cannot  render  any  foreign  capi- 
tal or  labor  available  to  help  the  nation  which  lays  the  tariff.  If 
a  nation  lays  import  duties  for  revenue  some  part  of  them  may 
fall  on  the  foreigner,  but  if  it  lays  such  duties  for  protection  it 
keeps  foreign  goods  out.  If,  then,  the  foreigner  stays  at  home 
and  is  forced  to  keep  his  goods  at  home,  the  protecting  country 
cannot  make  use  of  him  or  his  goods  in  any  way  whatever  to 
suit  its  ends  or  avert  its  misfortunes.  Whatever  effect  the  pro- 
tective taxes  exert  must  be  exerted  in  the  protecting  country, 
on  its  own  labor  and  capital.  Any  favor  or  encouragement 
which  the  protective  system  exerts  on  one  group  of  its  popula- 
tion must  be  won  by  an  equivalent  oppression  exerted  on  some 
other  group.  To  suppose  the  contrary  is  to  deny  the  most  obvi- 
ous application  of  the  conservation  of  energy  to  economic  forces. 
If  the  legislation  did  not  simply  transfer  capital  it  would  have  to 
make  capital  out  of  nothing.  Now  the  transfer  is  not  simply 
an  equal  redistribution  ;  there  is  loss  and  waste  in  the  case  of  any 
tax  whatsoever.  There  is  especial  loss  and  waste  in  the  case  of 
a  protective  tax.  We  cannot  collect  taxes  and  redistribute  them 
without  loss ;  much  less  can  we  produce  forced  monopolies  and 
distorted  industrial  relations  without  loss.  It  follows  then  that 
if  a  nation  could  come  into  some  temporary  industrial  compres- 
sion or  arrested  growth,  a  protective  tariff  not  only  would  not 
help  it  out,  but  would  contribute  to  still  further  limit  its  powers 
of  self-development  and  to  restrain  its  recuperative  energies. 


248  THE  PRINCETON  REVIEW. 

We  have  then  reduced  the  issue  which  we  are  discussing  to 
such  terms  that,  after  analyzing  the  phenomena,  we  are  abfe  to 
test  the  protectionist  theory  by  universal  canons  of  science,  and 
we  have  a  mathematical  demonstration  that  protection  is  a  delu- 
sion, which,  like  bimetallism,  f^at  money,  socialism,  and  utopian- 
ism,  is  an  attempt  to  make  something  out  of  nothing,  or  to 
create  energy  by  law. 

Here  we  shall  be  met,  however,  by  the  people  who  insist  on 
believing  that  a  better  organization  of  labor,  or  greater  activity 
of  labor,  or  some  other  advantage  which  is  real  altho  not  spe- 
cific, more  than  offsets  the  injury,  or  that  the  injured  ones  par- 
ticipate again  in  some  vague  gain.     It  is  very  singular  that  the 
people  who  believe  in  these  notions  are  so  slow  to  understand 
the  fact  that  whatever  lessens  the  wealth  of  a  communitv,  in  the 
widest  generalization  or  deduction  only  lessens  its  weafth !  and 
cannot  possibly  increase  it,  and  that  the  result  is  either  to  lessen 
the  wealth  per  capita,  or,  if  some  do  not  become  poorer,  then 
others  must  be  rendered  still  more  poor.     The  protective'  tariff 
must  act  on  people  who  without  it  would  distribute  their  indus- 
try according  to  the  chances  of  the  greatest  profit.     The  tariff 
is  needed,  by  the  protectionist  hypothesis,  in  order  to  counteract 
the  distribution  which   is  thus  brought  about.     But  the  tariff 
itself  can  appeal  to  no  motive  save  that  of  desire  for  profit.     It 
does  so  by  providing  that  a  certain  industry  shall,  under  pro- 
tection, pay  higher  profits  than  it  could  under  freedom,  and  it 
expects  that  this  inducement  will   operate  to  make  labor  and 
capital  seek  this  industry.    If  then  desire  for  profit  was  not  a  suf- 
ficient and  wise  guide  under  freedom,  what  makes  it  such  under 
protection  ?    The  notion  that  the  legislature  has  a  wisdom  greater 
than  that  of  the  people,  and  can  point  out  the  industries  they 
ought  to  pursue,  has  often  been   refuted;    but  the  protective 
theory  really  assumes  more  than  that.     It  assumes  that  the  law 
can  enlighten  the  desire  for  profit,  and  make  it  a  more  trust- 
worthy  guide  than  it  would  be  under  freedom.     In  truth  there 
is  nothing  at  all  wanted  in  the  cases  to  which  protection  is  ap- 
plied but  capital,  which  the  law  can  never  produce.     The  effi- 
ciency of  the  tariff  is  that  it  does  get  this  capital-from  other 
people.     The  rest  is  all  phrases  intended  to  occupy  attention 
while  the  thimblerig  is  going  on.     If  this  is  not  so,  let  some  pro- 


THE   ARGUMENT  AGAINST  PROTECTIVE    TAXES.         249 

tectionist  analyze  the  operation  of  his  system,  and  show  by  ref- 
erence to  undisputed  economic  principles  where  and  how  it 
exerts  any  effect  on  production  to  increase  it.  Customs  some- 
times grow  up  under  the  efforts  of  men  to  bring  about  arrange- 
ments which  will  be  convenient  for  industry  and  commerce.  The 
law  can  often  follow  these  customs,  recognize  them,  and  give 
them  positive  form.  Institutions  grow  out  of  needs,  and  to  meet 
purposes,  to  which  institutions  the  law  can  give  form  and  sanc- 
tion. I  know  of  nothing  more  than  this  which  the  law  can  do 
for  industry. 

What  has  been  proved  now  of  a  new  country  holds  true  all 
the  more  of  an  old  one.  The  only  difference  is  that  a  new  coun- 
try may  endure  protection  while  an  old  one  cannot.  A  new 
country  which  produces,  as  all  new  countries  do,  food  and  raw 
materials  may  create  parasite  industries  to  live  on  the  exuber- 
ant productions  of  its  natural  industries,  and  on  the  special  ad- 
vantage in  exchange  which  a  new  country  has  when  it  exchanges 
food  and  raw  materials  for  finished  products.  An  old  country 
cannot  exclude  food  and  raw  materials.  In  a  new  country  the 
burden  of  the  tariff  system  falls  on  the  superfluity  of  the  people 
— superfluity  not  in  respect  to  what  they  would  like  to  have,  but 
in  comparison  with  what  people  in  old  countries  have.  In  an  old 
country  there  are  large  classes  of  persons  who  are  at  best  on 
the  verge  of  poverty,  and  who  are  forced  to  labor  hard  and  for 
long  hours  to  win  subsistence.  Taxes  on  food  and  raw  mate- 
rials would  crush  these  classes  down  to  misery.  Germany  is 
trying  it  with  a  tariff  which  is  quite  insignificant  compared  with 
ours.  What  I  have  proved,  therefore,  with  regard  to  the  effect 
of  a  protective  tariff  in  a  new  country  holds  a  fortiori  in  an  old 
country,  and  is  true  universally.  A  restricted  trade  lowers  the 
physical  well-being  of  the  population,  and,  with  that,  all  chance  of 
intellectual  and  moral  well-being,  below  what  it  would  be  under 
free  trade,  with  the  same  conditions  of  labor,  capital,  and  land. 

II.  I  go  on  then  to  consider  the  other  protectionist  position  : 
that  protection  is  not  a  means  of  wealth,  but  is  temporarily  ex- 
pedient. 

Under  this  head  the  controversy  has  rambled  over  the  whole 
field  of  economic  speculation,  embracing  also  all  history  and  all 
statistics,  and  here  also  the  vague  sentimental  and  metaphysical 


250  THE  PRINCETON  REVIEW. 

considerations  have  had  the  greater  scope,  as  this  is  the  more 
popular  branch  of  the  controversy.  I  propose  to  notice  only  two 
or  three  of  the  arguments  for  the  expediency  of  the  protective 
tariff,  and  those  I  must  take  more  by  way  of  illustration. 

During  the  recent  political  campaign  the  chief  argument 
which  was  used  was  that  the  tariff  made  wages  high.  I  have 
before  me  a  circular  which  was  widely  distributed  in  which  wage- 
receivers  were  told  that  free  trade  would'  either  force  employers 
to  close  their  shops  or  to  reduce  their  wages  to  foreign  rates. 
In  Germany  the  argument  is  that  English  workers  get  higher 
wages,  which  proves  that  they  are  better  workmen,  and  that  the 
Germans  need  protection  against  them.  In  America  the  argu- 
ment is  that  the  Englishmen  do  not  get  as  good  wages  as  the 
Americans,  and  that  therefore  the  Americans  need  protection. 
The  advantage  of  an  empirical  argument  is  that  it  goes  as  well 
one  end  foremost  as  the  other.  Suppose  the  Germans  should 
argue  like  the  Americans.  They  would  then  have  to  argue  that 
free  trade  would  raise  their  wages  to  the  English  rate,  as  the 
Americans  argue  that  free  trade  would  lower  their  wages  to  the 
English  rate.  Suppose  the  Americans  should  borrow  the  Ger- 
man argument.  They  would  then  have  to  argue  that,  as  the 
Americans  get  higher  wages,  it  proves  that  they  are  better 
workmen  than  the  English,  and  need  no  protection  against 
them,  and  a  fortiori  none  against  the  workmen  of  the  Continent. 

There  is  one  entirely  American  element  in  this  argument, 
however.  That  is  the  claim  or  assumption  that  the  high  com- 
fort of  the  American  laborers  is  due  to  the  tariff.  One  orator 
during  the  last  campaign,  who  spoke  with  the  authority  of  high 
ofificial  position,  spoke  with  contempt  and  impatience  of  the  low 
plane  on  which  this  tariff  question  is  discussed,  as  if  it  were  a 
mere  question  of  dollars  and  cents,  when  in  fact  it  is  a  question 
of  status  of  the  population  and  of  the  well-being  of  the  wages 
classes. 

We  must  distinguish  here  two  propositions  about  wages 
which  are  constantly  confused  with  each  other,  and  which  the 
protectionists  find  it  very  useful  to  confuse,  altho  they  are  in- 
consistent with  each  other,  and  both  are  false. 

It  is  argued  (i)  that  we  want  protection  because  wages  are 
high,  and  (2)  that  we  want  protection  in  order  to  make  wages 


THE  ARGUMENT  AGAINST  PROTECTIVE   TAXES.        25 1 

high.  To  the  legislature  the  high  wages  are  represented  as 
caused  by  some  independent  forces,  and  as  a  fact  in  the  condi- 
tion of  the  country  which  constitutes  a  reason  for  protection. 
To  the  workman  it  is  argued  that,  the  politicians  and  the  em- 
ployers having  considered  the  matter  and  agreed  that  the 
American  workingman  ought  to  be  well  fed,  clothed,  etc.,  they 
have  decided  that  he  must  have  high  wages,  and  that  the  tariff 
is  the  way  to  get  them  for  him.  This  picture  of  the  employers 
neglecting  their  business  to  lobby  for  a  rise  in  the  wages  of  their 
own  men  would  be  entertaining  if  it  were  not  really  so  success- 
ful in  deceiving  those  to  whom  it  is  addressed.  The  two  branches 
of  this  argument  about  wages  demand  separate  consideration. 

I.  Sociology  is  such  a  new  science,  and  is  as  yet  so  little  un- 
derstood, that  it  is  not  strange  if  its  doctrines  have  not  yet 
spread  very  far  through  the  community,  but  a  superficial  ac- 
quaintance with  it  would  prevent  any  one  from  believing  that 
politicians  and  statesmen  can  plan  what  sort  of  a  people  it 
would  please  them  to  have,  or  what  degree  of  comfort  they  con- 
sider appropriate  for  the  working  classes.  Nevertheless  we 
have  hundreds  of  politicians  and  orators  who  always  start  from 
a  conception  of  this  sort.  It  is  evident,  however,  that  the  peo- 
ple of  the  United  States  must  get  their  living  out  of  the  soil  of 
the  United  States.  We  have  an  immense  amount  of  land  of  the 
best  quality,  navigable  rivers,  great  forests,  mines  of  metal  and 
coal,  and  we  have  to  get  out  what  we  can  with  the  labor  and 
capital  at  our  disposal.  Whatever  we  get  out  will  be  distributed 
amongst  us  according  to  our  shares  in  the  production.  As  the 
natural  stores  are  very  rich  and  easy  to  get  at,  and  as  the  labor- 
ers are  few,  it  follows  that  the  average  product  per  laborer  is 
greater  than  can  be  obtained  in  old  countries,  where  the  soil  is 
more  or  less  exhausted,  and  where  the  population  is  so  dense  as 
to  make  the  competition  of  life  very  hard.  This  latter  state  of 
things  affords  us  the  second  term  of  comparison  by  which  we 
measure  our  status.  Taken  absolutely,  there  is  plenty  of  room 
for  improvement  in  our  situation,  and  in  the  status  of  whole 
classes  of  our  population. 

We  have,  then,  a  perfectly  obvious  and  sufficient  explanation 
of  the  status  of  our  people  in  natural  facts.  The  statesmen 
have  never  planned    this  or  done  anything  to  help  it.     They 


352  THE  PRINCETON  REVIEW. 

have  only  marred  it  more  or  less.  What  we  are  is  the  result  of 
our  inherited  traits  and  traditions,  and  of  our  physical  surround- 
ings. What  there  is  about  us  which  is  good  or  bad,  strong  or 
weak,  is  alike  to  be  attributed  to  these  causes.  High  wages, 
therefore,  or,  more  properly  speaking,  high  average  comfort, 
with  little  pauperism  or  misery,  are  incidents  of  our  situation  as 
early  comers  on  a  new  continent.  Yet  there  are  people  who 
tell  us  that  they,  in  their  wisdom,  have  made  us  well  off  by  tax- 
ing us,  and  that  we  should  not  be  so  well  off  any  more  if  we 
should  get  rid  of  the  taxes,  and  they  persuade  the  people  who 
pay  nearly  all  the  taxes  on  consumption — namely,  the  artisans 
and  laborers — that  they  could  not  get  their  living  on  this  conti- 
nent if  they  did  not  pay  taxes.  That  is  like  telling  a  laborer 
who  opens  his  dinner-pail  that  he  would  have  more  dinner  if  he 
would  throw  away  a  slice  of  bread. 

This  continent,  however,  is  not  so  exclusively  favored  that 
it  is  likely  to  draw  to  itself  all  the  population  of  the  globe. 
Other  continents  have  their  advantages,  and  the  one  which  has 
the  best  advantages  for  food  and  raw  materials  cannot  in  the 
nature  of  things  have  those  advantages  which  come  from  a  dense 
population  and  a  high  development  of  the  arts  and  sciences. 
No  one  will  be  willing  to  turn  away  from  the  industries  for 
which  the  country  offers  the  best  advantages  to  take  up  those 
in  which  other  countries  have  the  best  advantages,  unless  the 
difference  can  be  made  up  to  him  in  some  way.  Hence  manu- 
facturing industry  here  has  always  had  to  contend  with  the 
profits  possible  in  agricultural  pursuits.  Wages — so  far  as  any 
wages  class  has  ever  yet  been  developed  here — must  be  high 
enough  to  give  the  same  scale  of  comfort  as  can  be  won  in 
using  land.  The  high  wages  and  general  high  average  of  com- 
fort are,  therefore,  plainly  the  same  thing,  and  both  proceed 
together  out  of  the  actual  physical  circumstances  of  the  people. 

What,  then,  can  the  tariff  do  about  wages  ?  It  can  only 
increase  the  wages  in  mechanical  pursuits  by  deducting  from 
the  gains  of  agriculture.  As  we  said  above,  it  can  win  nothing 
for  some  without  an  equivalent  or  greater  deduction  from  others. 
It  no  doubt  draws  upon  each  mechanical  industry  to  make  it 
help  support  all  the  others,  and  so  it  weakens  them  all ;  but 
whatever  strength  and  help  it  brings  to  them  as  a  group  it  must 


THE  ARGUMENT  AGAINST  PROTECTIVE   TAXES.         253 

take  from  other  groups.  If,  then,  we  are  candidly  seeking  for 
the  true  effects  of  the  restrictive  system  on  the  national  wel- 
fare, and  on  the  welfare  of  special  classes,  we  must  note  that 
this  operation  cannot  increase  the  national  welfare,  and  we  must 
look  to  see  on  whom  it  is  that  the  corresponding  loss  falls.  It 
is  plain  that  it  is  upon  the  agricultural  industries  of  the  country, 
and  accordingly  a  special  bundle  of  fallacies  has  been  devised 
for  deceiving  the  agriculturists  into  the  belief  that  they  are  gain- 
ers by  it.  It  is  evident,  however,  that  every  reduction  in  agricul- 
tural profits  makes  it  easier  for  the  employer  to  compete  with  the 
land  for  labor.  The  rising  wages  and  the  falling  profits  of  agri- 
culture meet  each  other  at  a  point  below  what  the  profits  of 
agriculture  would  be  under  freedom.  If  there  were  no  tariff, 
the  wages  of  the  wages  class  must  go  up  to  the  full  measure  of 
the  agricultural  profits  under  freedom.  Hence  the  tariff  lowers 
wages.  It  never  has  had  and  never  can  have  any  other  effect. 
The  employer  in  a  protected  industry  pays  no  more  than  mar- 
ket rates  for  wages,  and  he  could  not  possibly  pay  any  less. 
The  notion  that  he  could  lower  wages  to  some  foreign  level  in 
the  midst  of  a  country  where  labor  could  win  higher  rewards  is 
of  course  absurd. 

We  see,  then,  that  the  argument  that  the  tariff  makes  wages 
high  is  entirely  without  foundation.  It  has  lowered  Avages.  We 
see  that  the  notion  of  having  a  tariff  in  order  to  secure  to  our 
people  what  they  have  as  their  birthright,  and  what  the  tariff 
only  diminishes,  viz.,  a  comparatively  better  and  easier  existence 
than  the  people  of  older  countries,  is  an  imposture.  It  has  very 
great  popular  effect  because  the  popular  notion  is  generally  that 
we  owe  all  our  prosperity  to  ourselves  and  to  what  we  call  "our 
institutions,"  when  in  truth  we  owe  everything  that  we  are  to 
historical  antecedents  and  physical  conditions. 

Having  stripped  off  this  humbug  from  the  issue,  as  stated  by 
the  protectionists,  we  may  come  back  to  the  scornful  complaint 
that  we  are  discussing  the  question  on  a  low  level.  We  were 
told  that  we  ought  to  debate  it  as  a  great  question  of  status  of  the 
population,  etc.,  and  we  have  found  that  this  was  all  rhetoric  and 
fustian  except  the  effect  of  the  tariff  to  lower  the  status  of  the 
population.  It  follows,  then,  that  we  were  right  to  debate  it  as 
a  question  of  dollars  and  cents  only.     There  is  nothing  else  in 


254  THE  PRINCETON'  REVIEW. 

it.  A  wants  protection ;  that  is,  he  wants  B's  money.  B  does 
not  want  to  let  him  have  it.  A  talks  sentiment  and  metaphy- 
sics finely,  and,  after  all,  all  there  is  in  it  is  that  he  wants  B's 
money.  A  does  not  otherwise  show  much  interest  in  sentiment 
and  patriotism  and  metaphysical  goods  generally.  He  never 
goes  to  Washington  to  lobby  for  education,  or  scientific  research, 
or  geographical  exploration,  or  for  any  philanthropic  scheme, 
unless  there  is  a  chance  in  it  for  him  to  get  B's  money.  He  is 
then  moved  to  scorn  at  B's  sordid  love  of  money,  and  he  goes 
to  hear  a  lecture  on  "  materialism"  to  gratify  his  wounded  feel- 
ings because  B  will  not  give  up  his  money.  The  matter  is  all 
stated  from  A's  standpoint.  We  see  him  all  the  time.  For 
him  to  want  B's  money  is  patriotic.  It  is  "  developing  our  re- 
sources." It  is  noble.  For  B  to  want  to  keep  the  same  money 
is  mean.  I  insist  upon  the  matter  being  stated  in  the  most 
crass  and  vulgar  way,  just  because  that  is  all  there  is  of  it  when 
the  humbug  is  all  eliminated.  The  student  of  history  then  rec- 
ognizes a  very  old  friend.  The  robber-barons,  Robin  Hood, 
Dick  Turpin,  and  others  have  had  the  same  opinion  of  the 
nobility  of  wanting  other  people's  money,  and  of  the  meanness 
of  the  "trader"  or  laborer  who  did  not  want  to  lose  his  earnings. 
2.  Let  us  next  look  at  the  other  doctrine,  that  we  need  a 
protective  tariff  because  wages  are  high;  or  the  equivalent  doc- 
trine, that  we  cannot  compete.  The  people  of  the  United 
States  can  compete  with  anybody  in  getting  wealth.  The  high 
wages  are  a  proof  of  it ;  but  they  cannot  compete  with  every- 
body else  in  every  form  of  industry.  They  have  only  a  limited 
number  of  laborers  and  a  limited  amount  of  capital.  The  same 
man  cannot  be  doing  two  things  at  once.  The  same  capital 
cannot  be  employed  in  two  uses.  Hence  it  will  be  wise  and 
necessary  to  choose  the  most  profitable  of  all  the  profitable 
employments  which  are  possible.  It  will  follow  that  we  cannot 
afford  to  compete  in  any  industry  which  will  not  pay  here  as 
well  as  those  which  have  special  advantages  here.  If  we  cannot 
compete,  it  is  because  we  cannot  afford  to  compete.  We  are  too 
well  off.  We  cannot  compete  with  "  foreign  paupers,"  just  be- 
cause we  are  not  paupers.  "  Pauper,"  of  course,  is  one  of  those 
silly  and  invidious  terms  which  have  been  introduced  into  this 
discussion  in  the  interest  of  falsehood  and  folly.     Paupers  and 


THE  ARGUMENT  AGAINST  PROTECTIVE    TAXES.        255 

princes  live  in  idleness  supported  by  taxation.  No  one  can  com- 
pete with  them.  Seriously,  then,  we  cannot  compete  with  men 
who  are  fiercely  competing  with  each  other  for  low  wages  in  a 
dense  population  because  we  are  not  fiercely  competing  with 
each  other.  We  have  abundant  chances.  The  protectionists 
are  not  content,  however,  to  use  our  advantages  and  avoid  com- 
petition, which  is  what  every  sensible  man  does  in  private  life. 
According  to  them  we  must  go  to  seek  competition.  It  will  be 
told  in  history  that  a  public  bureau  of  our  government  spent  part 
of  the  capital  of  the  nation  in  seeking  competition  with  China- 
men in  making  tea,  at  the  very  moment  when  the  same  govern- 
ment was  trying  to  devise  means  to  prevent  Chinese  competition 
in  this  country,  where  it  could  do  no  harm.  As  we  shall  seek 
competition  with  less  favorably  situated  people  only  at  a  con- 
stant loss  as  compared  with  the  gains  we  might  win  in  our  own 
favored  industries,  thoce  who  are  carrying  on  the  self-support- 
ing industries  must  pay  taxes  to  make  up  the  loss,  and  the 
wealth  of  the  country  must  undergo  a  constant  waste.  If  a 
blacksmith  shoiild  say  that  he  could  not  compete  with  the  shoe- 
maker at  making  shoes,  and  therefore  that  he  ought  to  be  paid 
twice  as  much  as  the  shoemaker  for  making  shoes,  his  sanity 
would  be  doubted,  but  that  is  just  the  argument  that  we  need  a 
tariff  because  wages  are  high.  It  is  because  wages  are  high  that 
we  do  not  need  one,  and  it  is  because  we  cannot  compete  in 
certain  industries  that  we  ought  not  to  try.  Some  people  think 
it  is  derogatory  to  us  not  to  do  everything  for  ourselves ;  and  as 
they  always  seem  glad  to  hear  that  we  are  exporting  more  and 
more,  they  seem  to  be  desirous  that  we  should  make  things  for 
all  the  rest  of  the  world  too.  What,  then,  I  ask,  is  the  re?t  of  the 
world  to  do  for  us?  If  we  take  all  the  industries,  how  will 
they  pay  us  for  what  we  do  for  them  ?  Competition  is  the  force 
which  under  freedom  indicates  to  us  what  we  can  do  for  our- 
selves and  them,  and  what  we  can  let  them  do  for  us  to  our 
final  maximum  advantage.  To  shut  off  competition  and  go  into 
the  industries  which  the  ignorant  empiricism  of  Congress  or. 
the  caprice  of  individuals  may  select,  is  like  unhinging  the  com- 
pass and  steering  the  ship  by  chance. 

3.  There  is  no  argument  for  the  expediency  of  the  tariff  to 
be  found  in  the  matter  of  wages  in  any  of  its  aspects,  but  it  is 


356  THE  PRINCETON  REVIEW. 

sometimes  claimed  that  it  is  expedient  to  force  certain  indus- 
tries into  existence.     This  is  called  "'developing  our  industries." 
We  are  good-natured  enough  to  call  them  "our"  industries,  per- 
haps because  we  all  pay  taxes  to  support  them,  not  because  we 
own   stock  in   them   or  participate   in  the  profits.     There  is  a 
very  strong  popular  notion  that  it  is  a  good  thing  for  A,  B,  and 
C  that  there  should  be  certain  mills,  factories,  etc.,  up  and  down 
the  country — a  notion  which  has  no  support  in  fact  at  all,  unless 
A,  B,  and  C  are  owners  of  land  near  the  factories,  etc.     If  an 
individual  were  shown  statistics  of  men  employed,  wages,  capi- 
tal, plant,  output,  etc.,   of   a  certain  establishment,  and  were 
asked  to   invest    in  it,  he  would   no    doubt  inquire,   after  all, 
whether  the  establishment  made  profits,  since  unfortunately  not 
every  big  chimney  does  so ;  but  when  we  are  making  speeches  or 
writing  essays  about  tariff,  this  last  question  is  entirely  ignored, 
and   big  figures  and  exclamation-points  take  the  place  of   the 
only  question  which  is  important.     If  an  industry  does  not  pay, 
it  is   an  industrial  abomination.     It  is  wasting  and  destroying. 
The  larger  it  is  the  more  mischief  it  does.    The  protected  manu- 
facturer  is  forced  to  allege,  when  he  asks  for  protection,  that  his 
business  would  not  pay  without  it.     He  proposes  to  waste  capi- 
tal.    If  he  should  waste  his  own  wealth  he  would  not  go  on 
long.     He  therefore  asks  the  legislature  to  give  him  power  to 
lay  taxes  on  his  fellow-citizens,  to  collect  from  them  the  capital 
which  he  intends  to  waste,  and  good  wages  for  himself  while  he 
is  carrying   on   that  business  besides.     This  is  what  is  called 
"  developing  our  industries,"  and  the  operation  of  the  law  is  such 
that  the  waste  and  destruction  can  go  on  indefinitely.     Either 
an  industry  can  pay  under  freedom,  in  which  case  it  does  not 
need  protection,  or  else  it  would  not  pay  under  freedom,  in 
which  case  it  is  wasting  the  wealth  of  the  nation  as  long  as  it 
goes  on.     It  follows  that  the  protective  tariff  is  not  a  temporary 
expedient,  and  it  is  mathematically  impossible  that  it  should 
ever  issue  in  an  independent  and  productive  Industry.     Other 
forces  may  come  into  play  in  time,  viz.,  those  which  would  at 
that  time  have  called  the  industry  in  question  into  existence, 
and  these  forces  may  render  the  industry  independent,  but  the 
tariff  can  never  produce  any  such  result. 

4.  Some  have  believed  that  the  tariff  system  brought  capital 


THE  ARGUMENT  AGAINST  PROTECTIVE  TAXES.        V^J 

into  the  country,  and  two  or  three  instances  of  foreign  manu- 
facturers who  have  estabhsjied  branches  here  have  been  pointed 
to  as  triumphant  proofs  of  it.  I  know  of  no  statistics  either 
of  the  amount  of  capital  so  imported  or  of  the  amount  which 
the  tariff  has  caused  to  be  exported ;  but  I  should  judge  from 
such  information  as  I  have  that  one  just  about  equalled  the 
other.  What  is  far  more  important,  however,  is  that  if  the 
tariff  were  taken  off  any  one  of  a  great  number  of  important 
articles,  the  people  could  save  more  capital  in  a  month  out  of 
their  diminished  cost  of  living  than  all  the  capital  which  has 
been  brought  in  here  in  twenty  years  on  account  of  the  tariff. 
A  similar  observation  applies  to  the  argument  for  deferring  the 
reform  oi  the  tariff,  that  it  would  destroy  capital  now  invested. 
No  one  proposes  or  desires  any  reckless  action  which  would  dis- 
regard vested  interests  of  any  kind,  altho  I  do  not  see  what 
difference  it  would  make  with  what  any  one  would  really  do^ 
whether  he  had  warning  that  the  tariff  would  be  repealed  in 
five  years  or  in  five  days ,  but  that  is  a  question  for  a  statesman, 
and  not  for  an  economist.  The  economist  may  point  out  that, 
if  any  capital  were  destroyed,  the  savings  of  the  people  from  a 
diminished  cost  of  living  would  constitute  an  enormous  fund  for 
replacing  that  capital  and  offsetting  that  loss,  so  that,  as  far  as 
the  mere  loss  of  capital  is  concerned,  there  would  be  no  argu- 
ment for  delay. 

5.  I  proceed  to  a  brief  but  very  cogent  argument  why  a  pro- 
tective tariff  is  not  expedient.  Protection  works  al!  the  time 
against  improvement.  In  April,  1838,  New  York  City  indulged 
in  great  rejoicings  over  the  arrival  of  the  first  steamships  from 
Europe.  In  April,  1842,  at  an  "  Industrial  Convention"  held  in 
Kew  York  City,  the  opening  of  steam  navigation  on  the  ocean 
was  alleged  as  one  of  the  chief  arguments  for  protection.  We 
are  taxed  to  open  our  rivers  and  harbors,  and  the  result  is 
cheaper  goods.  That  is  the  benefit  which  we  anticipated  and 
were  working  for,  thinking  that  it  would  be  a  gain.  As  soon  as 
It  is  realized,  however,  comes  a  clamor  from  home-producers  of 
those  kinds  of  goods  which  have  been  cheapened.  "  Whr.t ! 
Do  you  mean  to  say  that  it  is  a  good  thing  for  the  country  to 
have  people  get  the  things  which  we  make  at  a  low  price  ?  This 
will  never  do  ;"  and  so  a  tax-barrier  is  set  up  across  the  rivers 


258  THE  PRINCETON  REVIEW. 

and  harbors  to  imitate  the  former  barrier  of  sand  and  rock,  and 
make  things  as  dear. and  as  hard  to  get  as  before.  If  protection 
is  expedient,  then  this  argument  is  sound,  and  we  need  more 
protection  the  more  our  communication  with  foreign  nations  is 
faciUtated.  Steamships,  ocean  cables,  and  cheap  newspapers  are 
all  the  time  neutralizing  the  existing  protection,  and  more  taxes 
are  necessary  to  give  the  same  protection.  If  protection  is 
sound,  then  those  who  rejoice  over  improvements  in  communi- 
cation and  transportation  and  support  protection  are  guilty  of 
absurd  folly.  If  improvements,  inventions,  and  discoveries  are 
real  benefits  to  mankind,  then  protection  is  inexpedient  as  well 
as  philosophically  absurd. 

Commerce  is  plainly  entering  on  a  new  stage.    Common-sense 
makes  its  way  very  slowly  into  the  minds  of  men  when  it  has 
to  rely  on  its  own  merits,  but  the  course  of  progress  in  industry 
and  commerce  is  such  that  self-interest  often  becomes  hand-maid 
to  common-sense,  and  then  common-sense  gets  a  chance.     We 
have   seen  five  or  six  new  industries  grow  up  in  this  country 
within  a  few  years.    They  are  all  "  land  "  industries ;  that  is,  they 
belong  to  the  natural  advantages  of  the  country.     They  are  in 
their  infancy,  but  they  are  already  great,  and  what  they  are  to 
become  no  one  can  guess.     They  depend  on  a  foreign  market, 
and  they  have  been  made  possible  by  cheap  and  quick  ocean 
transit.     Within  a  year  a  fleet  of  new  steamers  promises  new 
growth  in  the  same  direction.     The  internal  transportation  of 
the  country,  especially  in  the  West  and  South-west,  will  support 
the  same  growth.     The  effect  is  to  cause  great  changes  in  the 
distribution  of  labor,  great  absorptions  of  capital  in  new  orders 
of  investments,  and  the  creation  of  immense  new  interests.     It 
would  be  overbold  to  predict  specific  results,  but  this  much  is 
clear:  the  competition  of  American  agriculture  will  drive  Eng- 
lish labor  and  capital  more  exclusively  into  manufacturing  and 
commerce.     The  complementary  effect   must  be  exerted  here, 
and  the  profits  of  land  industries  will  draw  off  labor  and  capital 
from  manufactures  and  commerce.     In  other  words,  the  inter- 
national division  ot  labor  will  be  rendered  more  perfect,  and  the 
consequence  must  be  greater  wealth  for  all.     But  if  the  tariff 
still  remains  as  a  barrier  to  imports,  i.e.,  return  cargoes,  the  ex- 
changes must  rule  low  to  the  detriment  of  all  the  exporting: 


THE   ARGUMENT  AGAINST  PROTECTIVE   TAXES.        259 

interests,  and  if  specie  is  imported  prices  must  advance.  But 
the  exports  cannot  rise,  since  they  are  forced  to  seek  a  foreign 
market.  They  will  therefore  be  low,  while  everything  else 
inside  the  country  is  high.  This  is,  of  course,  the  operation  of 
the  tariff  now  all  the  time,  and  it  is  the  mode  in  which  the 
tariff  oppresses  the  land  industries;  but  the  whole  course  of  the 
development  which  I  am  anticipating  will  be  to  make  this  oppres- 
sion»harder  and  sharper,  while  the  tariff  will  all  the  time  need  to 
be  raised  higher  and  higher  if  it  is  to  be  of  any  avail  at  all. 
How  long  will  the  system  stand  such  a  double  strain  ?  If  there 
is  any  industry  which  really  depends  upon  the  tariff,  it  cannot 
too  soon  begin  to  learn  to  do  without  it. 

William  G.  Sumner. 


November,  1881. 


SOCIOLOGY. 

EACH  of  the  sciences  which,  by  giving  to  man  greater 
knowledge  of  the  laws  of  nature,  has  enabled  him  to  cope 
more  intelligently  with  the  ills  of  life,  has  had  to  fight  for  its 
independence  of  metaphysics.  We  have  still  lectures  on  meta- 
physical biology  in  some  of  our  colleges  and  in  some  of  our 
public  courses,  but  biology  has  substantially  won  its  independ- 
ence. Anthropology  is  more  likely  to  give  laws  to  metaphysics 
than  to  accept  laws  from  that  authority.  Sociology,  however, 
the  latest  of  this  series  of  sciences,  is  rather  entering  upon  the 
struggle  than  emerging  from  it.  Sociology  threatens  to  with- 
draw an  immense  range  of  subjects  of  the  first  importance  from 
the  dominion  of  a  priori  speculation  and  arbitrary  dogmatism, 
and  the  struggle  will  be  severe  in  proportion  to  the  dignity  and 
importance  of  the  subject.  The  struggle,  however,  is  best  car- 
ried forward  indirectly,  by  simply  defining  the  scope  of  sociol- 
ogy, and  by  vindicating  its  position  amongst  the  sciences,  while 
leaving  its  relations  to  the  other  sciences  and  other  pursuits  of 
men  to  adjust  themselves  according  to  the  facts.  I  know  of 
nothing  more  amusing  in  these  days  than  to  see  an  old-fash- 
ioned metaphysician  applying  his  tests  to  the  results  of  scien- 
tific investigation,  and  screaming  with  rage  because  men  of 
scientific  training  do  not  care  whether  the  results  satisfy  those 
tests  or  not. 

Sociology  is  the  science  of  life  in  society.  It  investigates 
the  forces  which  come  into  action  wherever  a  human  society 
exists.  It  studies  the  structure  and  functions  of  the  organs  of 
human  society,  and  its  aim  is  to  find  out  the  laws'  in  subordi- 

"  It  has  been  objected  that  no  proof  is  offered  that  social  laws  exist  in  the  order 
of  nature.     By  what  demonstration  could  any  such  proof  be  given  a  priori  ?     If  a 


304  THE  PRINCETON  REVIEW. 

nation  to  which  human  society  takes  its  various  forms,  and 
social  institutions  grow  and  change.  Its  practical  utility  con- 
sists in  deriving  the  rules  of  right  social  living  from  the  facts 
and  laws  which  prevail  by  nature  in  the  constitution  and  func- 
tions of  society.  It  must,  without  doubt,  come  into  collision 
with  all  other  theories  of  right  living  which  are  founded  on 
authority,  tradition,  arbitrary  invention,  or  poetic  imagination. 

Sociology  is  perhaps  the  most  complicated  of  all  the  sci- 
ences, yet  there  is  no  domain  of  human  interest  the  details  of 
which  are  treated  ordinarily  with  greater  facility.  Various  re- 
ligions have  various  theories  of  social  living,  which  they  offer 
as  authoritative  and  final.  It  has  never,  so  far  as  I  know,  been 
asserted  by  anybody  that  a  man  of  religious  faith  (in  any 
religion)  could  not  study  sociology  or  recognize  the  existence 
of  any  such  science ;  but  it  is  incontestably  plain  that  a  man 
who  accepts  the  dogmas  about  social  living  which  are  imposed 
by  the  authority  of  any  religion  must  regard  the  subject  of 
right  social  living  as  settled  and  closed,  and  he  cannot  enter  on 
any  investigation  the  first  groundwork  of  which  would  be  doubt 
of  the  authority  which  he  recognizes  as  final.  Hence  social 
problems  and  social  phenomena  present  no  difficulty  to  him 
who  has  only  to  cite  an  authority  or  obey  a  prescription. 

Then  again  the  novelists  set  forth  "views"  about  social  mat- 
ters. To  write  and  read  novels  is  perhaps  the  most  royal  road 
to  teaching  and  learning  which  has  ever  been  devised.  The  pro- 
ceeding of  the  novelists  is  kaleidoscopic.  They  turn  the  same 
old  bits  of  colored  glass  over  and  over  again  into  new  combina- 
tions. There  is  no  limit,  no  sequence,  no  bond  of  consistency. 
The  romance-writing  social  philosopher  always  proves  his  case 
just  as  a  man  always  wins  who  plays  chess  with  himself. 

Then  again  the  Utopians  and  socialists  make  easy  work  of 
the  complicated  phenomena  with  which  sociology  has  to  deal. 
These  persons,  vexed  with  the  intricacies  of  social  problems, 
and  revolting  against  the  facts  of  the  social  order,  take  upon 
themselves   the   task   of  inventing   a   new  and   better   world. 

man  of  scientific  training  finds  his  attention  arrested,  in  some  group  of  phenom- 
ena, by  those  sequences,  relations,  and  recurrences  which  he  has  learned  to  note 
as  signs  of  action  of  law,  he  seeks  to  discover  the  law.  If  it  exists,  he  finds  it 
What  other  proof  of  its  existence  could  there  be  ? 


SOCIOLOGY.  305 

They  brush  away  all  which  troubles  us  men,  and  create  a 
world  free  from  annoying  limitations  and  conditions — in  their 
imagination.  In  ancient  times,  and  now  in  half-civilized  coun- 
tries, these  persons  have  been  founders  of  religions.  Some- 
thing of  that  type  always  lingers  around  them  still  and  apong 
us,  and  is  to  be  seen  amongst  the  reformers  and  philanthropists 
Avho  never  contribute  much  to  the  improvement  of  society  in 
any  actual  detail,  but  find  a  key  principle  for  making  the  world 
anew  and  regenerating  society.  I  have  even  seen  faint  signs  of 
the  same  mysticism  in  social  matters  in  some  of  the  green- 
backers  who  have  "thought  out"  in  bed,  as  they  relate,  a 
scheme  of  wealth  by  paper  money,  as  Mahomet  would  have 
received  a  Surah,  or  Joe  Smith  a  revelation  about  polygamy. 
Still  there  are  limits  to  this  resemblance,  because  in  our  nine- 
teenth-century American  life  a  sense  of  humor,  even  if  defec- 
tive, answers  some  of  the  purposes  of  common-sense. 

Then  again  all  the  whimsical  people  who  have  hobbies  of 
one  sort  or  another,  and  who  cluster  around  the  Social  Science 
Association,  come  forward  with  projects  which  are  the  result  of 
a  strong  impression,  an  individual  misfortune,  or  an  unregulated 
benevolent  desire,  and  which  are  therefore  the  product  of  a 
facile  emotion,  not  of  a  laborious  investigation. 

Then  again  the  dilettanti  make  light  work  of  social  questions. 
Every  one,  by  the  fact  of  living  in  society,  gathers  some  observa- 
tions of  social  phenomena.  The  belief  grows  up,  as  it  was  ex- 
pressed some  time  ago  by  a  professor  of  mathematics,  that  every- 
body knows  about  the  topics  of  sociology.  Those  topics  have  a 
broad  and  generous  character.  They  lend  themselves  easily  to 
generalizations.  There  are  as  yet  no  sharp  tests  formulated. 
Above  all,  and  worst  lack  of  all  as  yet,  we  have  no  competent 
criticism.  Hence  it  is  easy  for  the  aspirant  after  culture  to  ven- 
ture on  this  field  without  great  danger  of  being  brought  to 
account,  as  he  would  be  if  he  attempted  geology,  or  physics,  or 
biology.  Even  a  scientific  man  of  high  attainments  in  some 
•other  science,  in  which  he  well  understands  what  special  care, 
skill,  and  training  are  required,  will  not  hesitate  to  dogmatize 
about  a  topic  of  sociology.  A  group  of  half-educated  men  may 
be  relied  upon  to  attack  a  social  question  and  to  hammer  it 
dead  in  a  few  minutes  with  a  couple  of  commonplaces  and  a 
20 


306  THE  PRINCETON  REVIEW. 

sweeping  a  priori  assumption.  Above  all  other  topics,  social 
topics  lend  themselves  to  the  purposes  of  the  diner-out. 

Two  facts,  however,  in  regard  to  social  phenomena  need  only 
be  mentioned  to  be  recognized  as  true,  (i)  Social  phenomena  al- 
ways present  themselves  to  us  in  very  complex  combinations, 
and  (2)  it  is  by  no  means  easy  to  interpret  the  phenomena.  The 
phenomena  are  often  at  three  or  four  removes  from  their  causes. 
Tradition,  prejudice,  fashion,  habit,  and  other  similar  obstacles 
continually  warp  and  deflect  the  social  forces,  and  they  consti- 
tute interferences  whose  magnitude  is  to  be  ascertained  sepa- 
rately for  each  case.  It  is  also  impossible  for  us  to  set  up  a 
social  experiment.  To  do  that,  we  should  need  to  dispose  of 
the  time  and  liberty  of  a  certain  number  of  men.  It  follows 
that  sociology  requires  a  special  method,  and  that  probably  no 
science  requires  such  peculiar  skill  and  sagacity  in  the  observer 
and  interpreter  of  the  phenomena  which  are  to  be  studied.  One 
peculiarity  may  be  especially  noted  because  it  shows  a  very  com- 
mon error  of  students  of  social  science.  A  sociologist  needs  to 
arrange  his  facts  before  he  has  obtained  them  ;  that  is  to  say,  he 
must  make  a  previous  classification  so  as  to  take  up  the  facts  in 
a  certain  order.  If  he  does  not  do  this  he  maybe  overwhelmed 
in  the  mass  of  his  material  so  that  he  never  can  master  it.  How 
shall  any  one  know  how  to  classify  until  the  science  itself  has 
made  some  progress  ?  Statistics  furnish  us  the  best  illustration 
at  the  present  time  of  the  difificulty  here  referred  to. 

When,  now,  we  take  into  account  these  difficulties  and  re- 
quirements, it  is  evident  that  the  task  of  sociology  is  one  v/hich 
will  call  for  especial  and  long  training,  and  that  it  will  probably 
be  a  long  time  yet  before  we  can  train  up  any  body  of  special 
students  who  will  be  so  well  trained  in  the  theory  and  science 
of  society  as  to  be  able  to  form  valuable  opinions  on  points  of 
social  disease  and  social  remedy.  But  it  is  a  fact  of  familiar 
observation  that  all  popular  discussions  of  social  questions  seize 
directly  upon  points  of  social  disease  and  social  remedies.  The 
diagnosis  of  some  asserted  social  ill  and  the  prescription  of  the 
remedy  are  undertaken  offhand  by  the  first  comer,  and  without 
reflecting  that  the  diagnosis  of  a  social  disease  is  many  times 
harder  than  that  of  a  disease  in  an  individual,  and  that  to  pre- 
scribe for  a  society  is  to  prescribe  for  an  organism  which  is 


SOCIOLOGY.  307 

immortal.  To  err  in  prescribing  for  a  man  is  at  worst  to  kill 
him  ;  to  err  in  prescribing  for  a  society  is  to  set  in  operation 
injurious  forces  which  extend,  ramify,  and  multiply  their  effects 
in  ever  new  combinations  tliroughout  an  indefinite  future.  It 
may  pay  to  experiment  witli  an  individual  because  he  cannot 
wait  for  medical  science  to  be  perfected  ;  it  cannot  pay  to 
experiment  with  a  society  because  the  society  does  not  die 
and  can  afford  to  wait. 

If  we  have  to  consider  the  need  of  sociology,  innumerable 
reasons  for  studying  it  present  themselves.  In  spite  of  all  our 
acquisitions  in  natural  science,  the  conception  of  a  natural  law 
(which  is  the  most  important  good  to  be  won  from  studying 
natural  science)  is  yet  exceedingly  vague  in  the  minds  of  ordi- 
nary intelligent  people,  and  is  very  imperfect  even  amongst  the 
educated.  That  conception  is  hardly  yet  applied  by  anybody 
to  social  facts  and  problems.  Social  questions  force  themselves 
upon  us  in  multitudes  every  year  as  our  civilization  advances 
and  our  society  becomes  complex.  When  such  questions  arise 
they  are  wrangled  over  and  tossed  about  without  any  orderly 
discussion,  but  as  if  they  were  only  the  sport  of  arbitrary 
whims.  Is  it  not  then  necessary  that  we  enable  ourselves,  by 
study  of  the  facts  and  laws  of  society,  to  take  up  such  questions 
from  the  correct  point  of  view,  and  to  proceed  with  the  exami- 
nation of  them  in  such  order  and  method  that  we  can  reach 
solid  results,  and  thus  obtain  command  of  an  increasing  mass 
of  knowledge  about  social  phenomena  ?  The  assumption  which 
underlies  almost  all  discussion  of  social  topics  is  that  we  men 
need  only  make  up  our  minds  what  kind  of  a  society  we  want 
to  have,  and  that  then  we  can  devise  means  for  calling  that 
society  into  existence.  It  is  assumed  that  we  can  decide  to  live 
on  one  spot  of  the  earth's  surface  or  another,  and  to  pursue 
there  one  industry  or  another,  and  then  that  we  can,  by  our 
devices,  make  that  industry  as  productive  as  any  other  could  be 
in  that  place.  People  believe  that  we  have  only  to  choose 
whether  we  will  have  aristocratic  institutions  or  democratic 
institutions.  It  is  believed  that  statesmen  can,  if  they  will,  put 
a  people  in  the  way  of  material  prosperity.  It  is  believed  that 
rent  on  land  can  be  abolished  if  it  is  not  thought  expedient  \o 
have  it.     It  is  assumed  that  peasant  proprietors  can  be  brought 


308  THE  PRINCETON  REVIEW. 

into  existence  anywhere  where  it  is  thought  that  it  would  be  an 
advantage  to  have  them.  These  illustrations  might  be  multi- 
pHed  indefinitely.  They  show  the  need  of  sociology,  and  if  we 
should  go  on  to  notice  the  general  conceptions  of  society,  its  ills 
and  their  remedies,  which  are  held  by  various  religious,  pohtical, 
and  social  sects,  we  should  find  ample  further  evidence  of  the 
need  of  sociology. 

Let  us  then  endeavor  to  define  the  field  of  sociology.  Life 
in  society  is  the  life  of  a  human  society  on  this  earth.  Its  ele- 
mentary conditions  are  set  by  the  nature  of  human  beings  and 
the  nature  of  the  earth.  We  have  already  become  familiar, 
in  biology,  with  the  transcendent  importance  of  the  fact  that 
life  on  earth  must  be  maintained  by  a  struggle  against  nature, 
and  also  by  a  competition  with  other  forms  of  life.  In  the  latter 
fact  biology  and  sociology  touch.  Sociology  is  a  science  which 
deals  with  one  range  of  phenomena  produced  by  the  struggle 
for  existence,  while  biology  deals  with  another.  The  forces  are 
the  same,  acting  on  different  fields  and  under  different  con- 
ditions. The  sciences  are  truly  cognate.  Nature  contains  cer- 
tain materials  which  are  capable  of  satisfying  human  needs, 
but  those  materials  must,  with  rare  and  mean  exceptions,  be 
won  by  labor,  and  must  be  fitted  to  human  use  by  more  labor. 
As  soon  as  any  number  of  human  beings  are  each  struggling  to 
win  from  nature  the  material  goods  necessary  to  support  life, 
and  are  carrying  on  this  struggle  side  by  side,  certain  social 
forces  come  into  operation.  The  prime  condition  of  this 
society  will  lie  in  the  ratio  of  its  numbers  to  the  supply  of 
materials  within  its  reach.  For  the  supply  at  any  moment 
attainable  is  an  exact  quantity,  and  the  number  of  persons  who 
can  be  supplied  is  arithmetically  limited.  If  the  actual  number 
present  is  very  much  less  than  the  number  who  might  be  sup- 
ported, the  condition  of  all  must  be  ample  and  easy.  Freedom 
and  facility  mark  all  social  relations  under  such  a  state  of 
things.  If  the  number  is  larger  than  that  which  can  be  sup- 
plied, the  condition  of  all  must  be  one  of  want  and  distress,  or 
else  a  few  must  be  well  provided,  the  others  being  proportion- 
ately still  worse  off.  Constraint,  anxiety,  possibly  tyranny 
and  repression  mark  social  relations.  It  is  when  the  social 
pressure  due  to  an  unfavorable  ratio    of   population    to    land 


SOCIOLOGY.  309 

becomes  intense  that  the  social  forces  develop  increased  activity. 
Division  of  labor,  exchange,  higher  social  organization,  emigra- 
tion, advance  in  the  arts,  spring  from  the  necessity  of  contend- 
ing against  the  harsher  conditions  of  existence  which  are  con- 
tinually reproduced  as  the  population  surpasses  the  means  of 
existence  on  any  given  status. 

The  society  with  which  we  have  to  deal  does  not  consist  of 
any  number  of  men.  An  army  is  not  a  society.  A  man  with 
his  wife  and  his  children  constitutes  a  society,  for  its  essential 
parts  are  all  present,  and  the  number  more  or  less  is  immaterial. 
A  certain  division  of  labor  between  the  sexes  is  imposed  by  na- 
ture. The  family  as  a  whole  maintains  itself  better  under  an 
organization  with  division  of  labor  than  it  could  if  the  functions 
were  shared  so  far  as  possible.  From  this  germ  the  develop- 
ment of  society  goes  on  by  the  regular  steps  of  advancement  to 
higher  organization,  accompanied  and  sustained  by  improve- 
ments in  the  arts.  The  increase  of  population  goes  on  accord- 
ing to  biological  laws  which  are  capable  of  multiplying  the  spe- 
cies beyond  any  assignable  limits,  so  that  the  number  to  be 
provided  for  steadily  advances,  and  the  status  of  ease  and  abun- 
dance gives  way  to  a  status  of  want  and  constraint.  Emigration 
is  the  first  and  simplest  remedy.  By  winning  more  land  the  ratio 
of  population  to  land  is  once  more  rendered  favorable.  It  is  to 
be  noticed,  however,  that  emigration  is  painful  to  all  men.  To 
the  uncivilized  man,  to  emigrate  means  to  abandon  a  mass  of 
experiences  and  traditions  which  have  been  won  by  suffering, 
and  to  go  out  to  confront  new  hardships  and  perils.  To  the 
civilized  man  migration  means  cutting  off  old  ties  of  kin  and 
country.  The  earth  has  been  peopled  by  man  at  the  cost  of 
this  suffering. 

On  the  side  of  the  land  also  stands  the  law  of  the  diminish- 
ing return  as  a  limitation.  More  labor  gets  more  from  the  land, 
but  not  proportionately  more.  Hence,  if  more  men  are  to  be 
supported,  there  is  need  not  of  a  proportionate  increase  of  labor, 
but  of  a  disproportionate  increase  of  labor.  The  law  of  popula' 
tion,  therefore,  combined  with  the  law  of  the  diminishing  return 
constitutes  the  great  underlying  condition  of  society.  Emigra- 
tion, improvements  in  the  arts,  in  morals,  in  education,  in  politi- 
cal organization,  are  only  stages  in  the  struggle  of  man  to  meet 


310  THE  PRINCETON  REVIEW. 

these  conditions,  to  break  their  force  for  a  time,  and  to  win 
room  under  them  for  ease  and  enlarg"ement.  Ease  and  enlarg-e- 
ment  mean  either  power  to  support  more  men  on  a  given  stage 
of  comfort  or  power  to  advance  the  comfort  of  a  given  number 
of  men.  Progress  is  a  word  which  has  no  meaning  save  in  view 
of  the  laws  of  population  and  the  diminishing  return,  and  it  is 
quite  natural  that  any  one  who  fails  to  understand  those  laws 
should  fall  into  doubt  which  way  progress  points,  whether  towards 
wealth  or  poverty.  The  laws  of  population  and  the  diminishing 
return,  in  their  combination,  are  the  iron  spur  which  has  driven 
the  race  on  to  all  which,  it  has  ever  achjeved,  and  the  fact  that 
population  ever  advances,  yet  advances  against  a  barrier  which 
resists  more  stubbornly  at  every  step  of  advance,  unless  it  is 
removed  to  a  new  distance  by  some  conquest  of  man  over 
nature,  is  the  guarantee  that  the  task  of  civilization  will  never 
be  ended,  but  that  the  need  for  more  energy,  more  intelligence, 
and  more  virtue  will  never  cease  while  the  race  lasts.  If  it  were 
possible  for  an  increasing  population  to  be  sustained  by  propor- 
tionate increments  of  labor,  we  should  all  still  be  living  in  the 
original  home  of  the  race  on  the  spontaneous  products  of  the 
earth.  Let  him,  therefore,  who  desires  to  study  social  phenom- 
ena first  learn  the  transcendent  importance  for  the  whole  social 
organization,  industrial,  political,  and  civil,  of  the  ratio  of  popu- 
lation to  land. 

We  have  noticed  that  the  relations  involved  in  the  struggle 
for  existence  are  two-fold.  There  is  first  the  struggle  of  indi- 
viduals to  win  the  means  of  subsistence  from  nature,  and  sec- 
ondly there  is  the  competition  of  man  with  man  in  the  effort  to 
win  a  limited  supply.  The  radical  error  of  the  socialists  and 
sentimentalists  is  that  they  never  distinguish  these  two  relations 
from  each  other.  They  bring  forward  complaints  which  are 
really  to  be  made,  if  at  .all,  against  the  author  of  the  uni- 
verse for  the  hardships  which  man  has  to  endure  in  his  struggle 
with  nature.  The  complaints  are  addressed,  however,  to  society ; 
that  is,  to  other  men  under  the  same  hardships.  The  only  social 
element,  however,  is  the  competition  of  life,  and  when  society  is 
blamed  for  the  ills  which  belong  to  the  human  lot,  it  is  only 
burdening  those  who  have  successfully  contended  with  those 
ills  with  the  further  task  of  conquering  the  same  ills  over  again 


SOCIOLOGY.  311 

for  somebody  else.  Hence  liberty  perishes  in  all  socialistic 
schemes,  and  the  tendency  of  such  schemes  is  to  the  deteriora- 
tion of  society  by  burdening  the  good  members  and  relieving 
the  bad  ones.  The  law  of  the  survival  of  the  fittest  was  not  made 
by  man  and  cannot  be  abrogated  by  man.  We  can  only,  by 
interfering  with  it,  produce  the  survival  of  the  unfittest.  If  a 
man  comes  forward  with  any  grievance  against  the  order  of 
society  so  far  as  this  is  shaped  by  human  agency,  he  must  have 
patient  hearing  and  full  redress ;  but  if  he  addresses  a  demand 
to  society  for  relief  from  the  hardships  of  life,  he  asks  simply 
that  somebody  else  should  get  his  living  for  him.  In  that  case 
he  ought  to  be  left  to  find  out  his  error  from  hard  experience. 

The  sentimental  philosophy  starts  from  the  first  principle 
that  nothing  is  true  which  is  disagreeable,  and  that  we  must 
not  believe  anything  which  is  "  shocking"  no  matter  what 
the  evidence  may  be.  There  are  various  stages  of  this  phi- 
losophy. It  touches  on  one  side  the  intuitional  philosophy 
which  proves  that  certain  things  must  exist  by  proving  that 
man  needs  them,  and  it  touches  on  the  other  side  the  vulgar 
socialism  which  affirms  that  the  individual  has  a  right  to  what- 
ever he  needs,  and  that  this  right  is  good  against  his  fellow- 
men.  To  this  philosophy  in  all  its  grades  the  laws  of  popula- 
tion and  the  diminishing  return  have  always  been  very  distaste- 
ful. The  laws  which  entail  upon  mankind  an  inheritance  of 
labor  cannot  be  acceptable  to  any  philosophy  which  maintains 
that  man  comes  into  the  world  endowed  with  natural  rights, 
and  an  inheritor  of  freedom.  It  is  a  death-blow  to  any  intui- 
tional philosophy  to  find  out,  as  an  historical  fact,  what  diverse 
thoughts,  beliefs,  and  actions  man  has  manifested,  and  it 
requires  but  little  actual  knowledge  of  human  history  to  show 
that  the  human  race  has  never  had  any  ease  which  it  did  not 
earn,  or  any  freedom  which  it  did  not  conquer.  Sociology, 
therefore,  by  the  investigations  which  it  pursues  dispels  illu- 
sions about  what  society  is  or  may  be,  and  gives  instead  knowl- 
edge of  facts  which  are  the  basis  of  intelligent  effort  by  man  to 
make  the  best  of  his  circumstances  on  earth.  Sociology,  there- 
fore, which  can  never  accomplish  anything  more  than  to  enable 
us  to  make  the  best  of  our  situation,  will  never  be  able  to 
reconcile  itself  with  those  philosophies  which  are  tryinp^  to  find 


312  THE  PRINCETON  REVIEW. 

out  how  we  may  arrange  things  so  as  to  satisfy  any  ideal  of 
society. 

The  competition  of  Hfe  has  taken  the  form,  historically,  of  a 
struggle  for  the  possession  of  the  soil.  In  the  simpler  states  of 
society  the  possession  of  the  soil  is  tribal,  and  the  struggles  take 
place  between  groups,  producing  the  wars  and  feuds  which  con- 
stitute almost  the  whole  of  early  history.  On  the  agricultural 
stage  the  tribal  or  communal  possession  of  land  exists  as  a 
survival,  but  it  gives  way  to  private  property  in  land  whenever 
the  community  advances  and  the  institutions  are  free  to  mould 
themselves.  The  agricultural  stage  breaks  up  tribal  relations 
and  encourages  individualization.  This  is  one  of  the  reasons 
why  it  is  such  an  immeasurable  advance  over  the  lower  forms 
of  civilization.  It  sets  free  individual  energy,  and,  while  the 
social  bond  gains  in  scope  and  variety,  it  also  gains  in  elasticity, 
for  the  solidarity  of  the  group  is  broken  up,  and  the  individual 
may  work  out  his  own  ends  by  his  own  means,  subject  only 
to  the  social  ties  which  lie  in  the  natural  conditions  of  human 
life.  It  is  only  on  the  agricultural  stage  that  liberty  as  civil- 
ized men  understand  it  exists  at  all.  The  poets  and  sentimen- 
talists, untaught  to  recognize  the  grand  and  world-wide  co-op- 
eration which  is  secured  by  the  free  play  of  individual  energy 
under  the  great  laws  of  the  social  order,  bewail  the  decay  of  early 
communal  relations,  and  exalt  the  liberty  of  the  primitive  stages 
of  civilization.  These  notions  all  perish  at  the  first  touch  of 
actual  investigation.  The  whole  retrospect  of  human  history 
runs  downwards  towards  beast-like  misery  and  slavery  to  the 
destructive  forces  of  nature.  The  whole  history  has  been  one 
series  of  toilsome,  painful,  and  bloody  struggles,  first  to  find  out 
where  we  were  and  what  were  the  conditions  of  greater  ease, 
and  then  to  devise  means  to  get  relief.  Most  of  the  way  the 
motives  of  advance  have  been  experience  of  suffering  and 
instinct.  It  is  only  in  the  most  recent  years  that  science  has 
undertaken  to  teach  without  and  in  advance  of  suffering,  and  as 
yet  science  has  to  fight  so  hard  against  tradition  that  its  author- 
ity is  only  slowly  winning  recognition.  The  institutions  whose 
growth  constitutes  the  advance  of  civilization  have  their  guar- 
antee in  the  very  fact  that  they  grew  and  became  established. 
They  suited  man's  purpose  better  than  what  went  before.    They 


SOCIOLOGY.  315 

are  all  imperfect,  and  all  carry  with  them  incidental  ills,  but 
each  came  to  be  because  it  M^as  better  than  what  went  before, 
and  each  which  has  perished  perished  because  a  better  one  sup- 
planted it. 

It  follows  once  and  for  all  that  to  turn  back  to  any  defunct 
institution  or  organization  because  existing  institutions  are  im- 
perfect is  to  turn  away  from  advance  and  is  to  retrograde.  The 
path  of  improvement  lies  forwards.  Private  property  in  land,  for 
instance,  is  an  institution  which  has  been  developed  in  the  most 
direct  and  legitimate  manner.  It  may  give  way  at  a  future  time 
to  some  other  institution  which  will  grow  up  by  imperceptible 
stages  out  of  the  efforts  of  men  to  contend  successfully  with  ex- 
isting evils,  but  the  grounds  for  private  property  in  land  are 
easily  perceived,  and  it  is  safe  to  say  that  no  a  priori  scheme  of 
state  ownership  or  other  tenure  invented  en  bloc  by  any  philoso- 
pher and  adopted  by  legislative  act  will  ever  supplant  it.  To 
talk  of  any  such  thing  is  to  manifest  a  total  misconception  of 
the  facts  and  laws  which  it  is  the  province  of  sociology  to  inves- 
tigate. The  case  is  less  in  magnitude  but  scarcely  less  out  of 
joint  with  all  correct  principle  when  it  is  proposed  to  adopt  a 
unique  tax  on  land,  in  a  country  where  the  rent  of  land  is  so 
low  that  any  important  tax  on  land  exceeds  it,  and  therefore 
becomes  indirect,  and  where  also  political  power  is  in  the  hands 
of  small  landowners,  who  hold  (without  ever  having  formulated 
it)  a  doctrine  of  absolute  property  in  the  soil  such  as  is  net  held 
by  any  other  landowners  in  the  world. 

Sociology  must  exert  a  most  important  influence  on  politi- 
cal economy.  Political  economy  is  the  science  which  investi- 
gates the  laws  of  the  material  welfare  of  human  societies.  It  is 
not  its  province  to  teach  individuals  how  to  get  rich.  It  is  a 
social  science.  It  was  the  first  branch  of  sociology  which  was 
pursued  by  man  as  a  science.  It  is  not  strange  that  when  the 
industrial  organization  of  society  was  studied  apart  from  the 
organism  of  which  it  forms  a  part  it  was  largely  dominated  over 
by  arbitrary  dogmatism,  and  that  it  should  have  fallen  into  dis- 
repute as  a  mere  field  of  opinion,  and  of  endless  wrangling  about 
opinions  for  which  no  guarantees  could  be  given.  The  rise  of  a 
school  of  "  historical "  economists  is  itself  a  sign  of  a  struggle 
towards  a  positive  and  scientific  study  of  political  economy,  in 


314  THE  PRINCETON  HE  VIE  IV. 

its  due  relations  to  other  social  sciences,  and  this  sign  loses 
none  of  its  significance  in  spite  of  the  crudeness  and  extrava- 
gance of  the  opinions  of  the  historical  economists,  and  in  spite 
of  their  very  marked  tendency  to  fall  into  dogmatism  and  hobby- 
riding.  Political  economy  is  thrown  overboard  by  all  groups 
and  persons  whenever  it  becomes  troublesome.  When  it  got 
in  the  way  of  Mr.  Gladstone's  land-bill  he  relegated  it,  by  impli- 
cation, to  the  planet  Saturn,  to  the  great  delight  of  all  the  fair- 
traders,  protectionists,  soft-money  men,  and  others  who  had 
found  it  in  the  way  of  their  devices.  What  political  economy 
needs  in  order  to  emerge  from  the  tangle  in  which  it  it  is  now 
involved,  and  to  win  a  dignified  and  orderly  development,  is  to 
find  its  field  and  its  relations  to  other  sciences  fairly  defined 
within  the  wider  scope  of  sociology.  Its  laws  will  then  take 
their  place  not  as  arbitrary  or  broken  fragments,  but  in  due  re- 
lation to  other  laws.  Those  laws  will  win  proof  and  establish- 
ment from  this  relation. 

For  instance  :  We  have  plenty  of  books,  some  of  them  by  able 
writers,  in  which  the  old-fashioned  Malthusian  doctrine  of  popu- 
lation and  the  Ricardian  law  of  rent  are  disputed  because  emi- 
gration, advance  in  the  arts,  etc.  etc.,  can  offset  the  action  of 
those  laws,  or  because  those  laws  are  not  seen  in  action  in  the 
United  States.  Obviously  no  such  objections  ever  could  have 
been  raised  if  the  laws  in  question  had  been  understood  or  had 
been  put  in  their  proper  bearings.  The  Malthusian  law  of  popula- 
tion and  the  Ricardian  law  of  rent  are  cases  in  which,  by  rare  and 
most  admirable  acumen,  powerful  thinkers  perceived  two  great 
laws  in  particular  phases  of  their  action.  With  wider  informa- 
tion it  now  appears  that  the  law  of  population  breaks  the  bar- 
riers of  Malthus'  narrower  formulze  and  appears  as  a  great  law 
of  biology.  The  Ricardian  law  of  rent  is  only  a  particular  ap- 
plication of  one  of  the  great  conditions  of  production.  We  have 
before  us  not  special  dogmas  of  political  economy,  but  facts  of 
the  widest  significance  for  the  whole  social  development  of  the 
race.  To  object  that  these  facts  may  be  set  aside  by  migration  or 
advance  in  the  arts  is  nothing  to  the  purpose,  for  this  is  only 
altering  the  constants  in  the  equation,  which  does  not  alter  the 
form  of  the  curve,  but  only  its  position  relatively  to  some  stand- 
ard line.      Furthermore,  the  laws  themselves  indicate  that  they 


SOCIOLOGY.  315 

have  a  maximum  point  for  any  society,  or  any  given  stage  of 
the  arts,  and  a  condition  of  under-population,  or  of  an  extrac- 
tive industry  below  its  maximum,  is  just  as  consistent  with  the 
law  as  a  condition  of  over-population  and  increasing  distress. 
Hence  inferences  as  to  the  law  of  population  drawn  from  the 
status  of  an  under-populated  country  are  sure  to  be  fallacious. 
In  like  manner  arguments  drawn  from  American  phenomena"  in 
regard  to  rent  and  wages,  when  rent  and  wages  are  as  yet  only 
very  imperfectly  developed  here,  lead  to  erroneous  conclusions. 
It  only  illustrates  the  unsatisfactory  condition  of  political  econ- 
omy, and  the  want  of  strong  criticism  in  it,  that  such  arguments 
can  find  admission  to  its  discussions  and  disturb  its  growth. 

It  is  to  the  pursuit  of  sociology  and  the  study  of  the  indus- 
trial organization  in  combination  with  the  other  organizations 
of  society  that  we  must  look  for  th6  more  fruitful  development 
of  political  economy.  We  are  already  in  such  a  position  with 
sociology  that  a  person  who  has  gained  what  we  now  possess  of 
that  science  will  bring  to  bear  upon  economic  problems  a 
sounder  judgment  and  a  more  correct  conception  of  all  social 
relations  than  a  person  who  may  have  read  a  library  of  the 
existing  treatises  on  political  economy.  The  essential  elements 
of  pohtical  economy  are  only  corollaries  or  special  cases  of 
sociological  principles.  One  who  has  command  of  the  law  of 
the  conservation  of  energy  as  it  manifests  itself  in  society  is 
armed  at  once  against  socialism,  protectionism,  paper  money, 
and  a  score  of  other  economic  fallacies.  The  sociological  view 
of  political  economy  also  includes  whatever  is  sound  in  the 
dogmas  of  the  "  historical  school,"  and  furnishes  what  that  school 
is  apparently  groping  after. 

As  an  illustration  of  the  light  which  sociology  throws  on  a 
great  number  of  political  and  social  phenomena  which  are  con- 
stantly misconstrued,  we  may  notice  the  differences  in  the 
industrial,  political,  and  civil  organization  which  are  produced 
all  along  at  different  stages  of  the  ratio  of  population  to  land. 

When  a  country  is  under-populated  new-comers  are  not  com- 
petitors but  assistants.  If  more  come  they  may  produce  not 
only  new  quotas,  but  a  surplus  besides,  to  be  divided  between 
themselves  and  all  who  were  present  before.  In  such  a  state  of 
things  land  is  abundant  and  cheap.     The  possession  of  it  con- 


3l6  THE  PRINCETON  REVIEW. 

fers  no  power  or  privilege.  No  one  will  work  for  another  for 
wages  when  he  can  take  up  new  land  and  be  his  own  master. 
Hence  it  will  pay  no  one  to  own  more  land  than  he  can  culti- 
vate by  his  own  labor,  or  with  such  aid  as  his  own  family  sup- 
plies. Hence,  again,  land  bears  little  or  no  rent,  there  will  be 
no  landlords  living  on  rent,  and  no  laborers  living  on  wages, 
but  only  a  middle  class  of  yeoman  farmers.  All  are  substan- 
tially on  an  equality,  and  democracy  becomes  the  political  form, 
because  this  is  the  only  state  of  society  in  which  the  dogmatic 
assumption  of  equality,  on  which  democracy  is  based,  is  realized 
as  a  fact.  The  same  effects  are  powerfully  re-enforced  by  other 
facts.  In  a  new  and  under-populated  country  the  industries 
which  are  most  profitable  are  the  extractive  industries.  The 
characteristic  of  these,  with  the  exception  of  some  kinds  of 
mining,  is  that  they  call  for  only  a  low  organization  of  labor  and 
small  amount  of  capital.  Hence  they  allow  the  workman  to 
become  speedily  his  own  master,  and  they  educate  him  to  free- 
dom, independence,  and  self-reliance.  At  the  same  time,  the 
social  groups  being  only  vaguely  marked  off  from  each  other,  it 
is  easy  to  pass  from  one  class  of  occupations,  and  consequently 
from  one  social  grade,  to  another.  Finally,  under  the  same  cir- 
cumstances, education,  skill,  and  superior  training  have  but 
inferior  value  compared  with  what  they  have  in  densely  popu- 
lated countries.  The  advantages  lie,  in  an  under-populated 
country,  with  the  coarser,  unskilled,  manual  occupations,  and 
not  with  the  highest  developments  of  science,  literature,  and 
art. 

If  now  we  turn  for  comparison  to  cases  of  over-population 
we  See  that  the  struggle  for  existence  and  the  competition  of 
life  are  intense  where  the  pressure  of  population  is  great.  This 
competition  draws  out  the  highest  achievements.  It  makes  the 
advantages  of  capital,  education,  talent,  skill,  and  training  tell 
to  the  utmost.  It  draws  out  the  social  scale  upwards  and 
downwards  to  great  extremes,  and  produces  aristocratic  social 
organizations  in  spite  of  all  dogmas  of  equality.  Landlords, 
tenants  {i.e.,  capitalist  employers),  and  laborers  are  the  three 
primary  divisions  of  any  aristocratic  order,  and  they  are  sure  to 
be  developed  whenever  land  bears  rent,  and  whenever  tillage 
requires   the   application    of   large    capital.     At   the  same  time 


SOCIOLOGY.  317 

liberty  has  to  undergo  curtailment.  A  man  who  has  a  square 
mile  to  himself  can  easily  do  as  he  likes,  but  a  man  who  walks 
Broadway  at  noon  or  lives  in  a  tenement-house  finds  his  power 
to  do  as  he  likes  limited  by  scores  of  considerations  for  the 
rights  and  feelings  of  his  fellow-men.  Furthermore,  organization 
with  subordination  and  discipline  is  essential  in  order  that  the 
society  as  a  whole  may  win  a  support  from  the  land.  In  an 
over-populated  country  the  extremes  of  wealth  and  luxury  are 
presented  side  by  side  with  the  extremes  of  poverty  and  dis- 
tress. They  are  equally  the  products  of  an  intense  social  pres- 
sure. The  achievements  of  power  are  highest,  the  rewards  of 
prudence,  energy,  enterprise,  foresight,  sagacity,  and  all  other 
industrial  virtues  is  greatest  ;  on  the  other  hand,  the  penalties  of 
folly,  weakness,  error,  and  vice  are  most  terrible.  Pauperism,  pros- 
titution, and  crime  are  the  attendants  of  a  state  of  society  in  which 
science,  art,  and  literature  reach  their  highest  developments. 
Now  it  is  evident  that  over-population  and  under-population 
are  only  relative  terms.  Hence  as  time  goes  on  any  under- 
populated nation  is  surely  moving  forward  towards  the  other 
status,  and  is  speedily  losing  its  natural  advantages  which  are 
absolute,  and  also  that  relative  advantage  which  belongs  to  it  if 
it  is  in  neighborly  relations  with  nations  of  dense  population 
and  high  civilization,  viz.,  the  chance  to  borrow  and  assimilate 
from  them  the  products,  in  arts  and  science,  of  high  civilization, 
without  enduring  the  penalties  of  intense  social  pressure. 

We  have  seen  that  if  we  should  try  by  any  measures  of  arbi- 
trary interference  and  relief  to  relieve  the  victims  of  social  pres- 
sure from  the  calamity  of  their  position,  we  should  only  offer 
premiums  to  folly  and  vice  and  extend  them  further.  We  have 
also  seen  that  we  must  go  forward  and  meet  our  problems.  We 
.cannot  escape  them  by  running  away.  If  then  it  be  asked  what 
the  wit  and  effort  of  man  can  do  to  struggle  with  the  problems 
offered  by  social  pressure,  the  answer  is  that  he  can  do  only 
what  his  instinct  has  correctly  and  surely  led  him  to  do  without 
any  artificial  social  organization  of  any  kind,  and  that  is,  by 
improvements  in  the  arts,  in  science,  in  morals,  in  political 
institutions,  to  widen  and  strengthen  the  power  of  man  over 
nature.  The  task  of  dealing  with  social  ills  is  not  a  new  task. 
People  set  about  it  and  discuss  it  as  if  the  human  race  had  hith- 


3l8  THE   PRINCETON  REVIEW. 

erto  neglected  it,  and  as  if  the  solution  of  the  problem  was  to 
be  something  new  in  form  and  substance,  different  from  the 
solution  of  all  problems  which  have  hitherto  engaged  human 
effort.  In  truth,  the  human  race  has  never  done  anything  else 
but  struggle  with  the  problem  of  social  welfare.  That  struggle 
constitutes  history,  or  the  life  of  the  human  race  on  earth.  That 
struggle  embraces  all  minor  problems  which  occupy  human  atten- 
tion here,  save  those  of  religion,  which  reaches  beyond  this 
world  and  finds  its  objects  beyond  this  life.  Every  successful 
effort  to  widen  the  power  of  man  over  nature  is  a  real  victory 
over  poverty,  vice,  and  misery,  taking  things  in  general  and  in 
the  long-run.  It  would  be  hard  to  find  a  single  instance  of  a 
direct  assault  by  positive  effort  upon  poverty,  vice,  and  misery 
which  has  not  either  failed  or,  if  it  has  not  failed  directly  and 
entirely,  has  not  entailed  other  evils  greater  than  the  one  which 
it  removed.  The  only  two  things  which  really  tell  on  the  wel- 
fare of  man  on  earth  are  hard  work  and  self-denial  {i.e.,  in  tech- 
nical language,  labor  and  capital),  and  these  tell  most  when  they 
are  brought  to  bear  directly  upon  the  effort  to  earn  an  hon- 
est living,  to  accumulate  capital,  and  to  bring  up  a  family  of 
children  to  be  industrious  and  self-denying  in  their  turn.  I 
repeat  that  this  is  the  way  to  work  for  the  welfare  of  man  on 
earth ;  and  what  I  mean  to  say  is  that  the  common  notion  that 
when  we  are  going  to  work  for  the  social  welfare  of  man  we 
must  adopt  a  great  dogma,  organize  for  the  realization  of  some 
great  scheme,  have  before  us  an  abstract  ideal,  or  otherwise  do 
anything  but  live  honest  and  industrious  lives,  is  a  great  mistake. 
From  the  stand-point  of  the  sociologist  pessimism  and  optimism 
are  alike  impertinent.  To  be  an  optimist  one  must  forget  the 
frightful  sanctions  which  are  attached  to  the  laws  of  right  living. 
To  be  a  pessimist  one  must  overlook  the  education  and  growth 
which  are  the  product  of  effort  and  self-denial.  In  either  case  one 
is  passing  judgment  on  what  is  inevitably  fixed,  and  on  which  the 
approval  or  condemnation  of  man  can  produce  no  effect.  The 
facts  and  laws  are,  once  and  for  all,  so,  and  for  us  men  that  is 
the  end  of  the  matter.  The  only  persons  for  whom  there  would 
be  any  sense  in  the  question  whether  life  is  worth  living  are  pri- 
marily the  yet  unborn  children,  and  secondarily  the  persons 
who   are   proposing  to   found    families.      For  these  latter  the 


SOCIOLOGY.  319 

question  would  take  a  somewhat  modified  form :  Will  life  be 
worth  living  for  children  born  of  me  ?  This  question  is,  unfor- 
tunately, not  put  to  themselves  by  the  appropriate  persons  as  it 
would  be  if  they  had  been  taught  sociology.  The  sociologist  is 
often  asked  if  he  wants  to  kill  off  certain  classes  of  troublesome 
and  burdensome  persons.  No  such  inference  follows  from  any 
sound  sociological  doctrine,  but  it  is  allowed  to  infer,  as  to  a 
great  many  persons  and  classes,  that  it  would  have  been  better 
for  society,  and  would  have  involved  no  pain  to  them,  if  they 
had  never  been  born. 

In  further  illustration  of  the  interpretation  which  sociology 
offers  of  phenomena  which  are  often  obscure,  we  may  note  the 
world-wide  effects  of  the  advances  in  the  arts  and  sciences  which 
have  been  made  during  the  last  hundred  years.  These  improve- 
ments have  especially  affected  transportation  and  communica- 
tion ;  that  is,  they  have  lessened  the  obstacles  of  time  and  space 
which  separate  the  groups  of  mankind  from  each  other,  and 
have  tended  to  make  the  whole  human  race  a  single  unit.  The 
distinction  between  over-populated  and  under-populated  coun- 
tries loses  its  sharpness,  and  all  are  brought  to  an  average. 
Every  person  who  migrates  from  Europe  to  America  affects  the 
comparative  status  of  the  two  continents.  He  lessens  the  pres- 
sure in  the  country  he  leaves  and  increases  it  in  the  country  to 
which  he  goes.  If  he  goes  to  Minnesota,  and  raises  wheat  there, 
which  is  carried  back  to  the  country  he  left  as  cheap  food  for 
those  who  have  not  emigrated,  it  is  evident  that  the  bearing 
upon  social  pressure  is  twofold.  It  is  evident,  also,  that  the 
problem  of  social  pressure  can  no  longer  be  correctly  studied  if 
the  view  is  confined  either  to  the  country  of  immigration  or  the 
country  of  emigration,  but  that  it  must  embrace  both.  It  is 
easy  to  see,  therefore,  that  the  ratio  of  population  to  land  with 
which  we  have  to  deal  is  only  in  peculiar  and  limited  cases  that 
ratio  as  it  exists  in  England,  Germany,  or  the  United  States. 
It  is  the  ratio  as  it  exists  in  the  civilized  world,  and  every  year 
that  passes,  as  our  improved  arts  break  down  the  barriers  be- 
tween different  parts  of  the  earth,  brings  us  nearer  to  the  state 
of  things  where  all  the  population  of  Europe,  America,  Aus- 
tralasia, and  South  Africa  must  be  considered  in  relation  to  all 
the  land  of  the  same  territories,  for  all  that  territory  will  be 


320  THE  PRINCETON  REVIEW. 

available  for  all  that  population,  no  matter  what  the  proportion 
may  be  in  which  the  population  is  distributed  over  the  various 
portions  of  the  territory.  The  British  Islands  may  become  one 
great  manufacturing  city.  Minnesota,  Texas,  and  Australia 
may  not  have  five  persons  to  the  square  mile.  Yet  all  will  eat 
the  meat  of  Texas  and  the  wheat  of  Minnesota,  and  wear  the 
wool  of  Australia  manufactured  on  the  looms  of  England. 
That  all  will  enjoy  the  maximum  of  food  and  raiment  under 
that  state  of  things  is  as  clear  as  anything  possibly  can  be  which 
is  not  yet  an  accomplished  fact.  We  are  working  towards  it  by 
all  our  instincts  of  profit  and  improvement.  The  greatest 
obstacles  are  those  which  come  from  prejudices,  traditions,  and 
dogmas,  which  are  held  independently  of  any  observation  of 
facts  or  any  correct  reasoning,  and  which  set  the  right  hand 
working  against  the  left.  For  instance :  the  Mississippi  Valley 
was,  a  century  ago,  as  unavailable  to  support  the  population  of 
France  and  Germany  as  if  it  had  been  in  the  moon.  The  Mis- 
sissippi Valley  is  now  nearer  to  France  and  Germany  than  the 
British  Islands  were  a  century  ago,  reckoning  distance  by  the 
only  true  standard,  viz.,  difficulty  of  communication.  It  is  a 
fair  way  of  stating  it  to  say  that  the  improvements  in  transpor- 
tation of  the  last  fifty  years  have  added  to  France  and  Germany 
respectively  a  tract  of  land  of  the  very  highest  fertility,  equal 
in  area  to  the  territory  of  those  states,  and  available  for  the 
support  of  their  population.  The  public  men  of  those  countries 
are  now  declaring  that  this  is  a  calamity,  and  are  devising  means 
to  counteract  it. 

The  social  and  political  effects  of  the  improvements  which 
have  been  made  must  be  very  great.  It  follows  from  what  we 
have  said  about  the  effects  of  intense  social  pressure  and  high 
competition,  that  the  effect  of  thus  bringing  to  bear  on  the 
great  centres  of  population  the  new  land  of  outlying  countries 
must  be  to  relieve  the  pressure  in  the  oldest  countries  and  at 
the  densest  centres.  Then  the  extremes  of  wealth  and  poverty, 
culture  and  brutahty,  will  be  contracted,  and  there  will  follow  a 
general  tendency  towards  an  average  equality  which,  however, 
must  be  understood  only  within  very  broad  limits.  Such  is  no 
doubt  the  meaning  of  the  general  tendency  towards  equality,  the 
decline  of  aristocratic  institutions,  the  rise  of  the  proletariat,  and 


SOCIOLOGY.  321 

the  ambitious  expansion,  in  short,  which  is  characteristic  of 
modern  civilized  society.  It  would  lead  me  too  far  to  follow 
out  this  line  of  speculation  as  to  the  future,  but  two  things 
ought  to  be  noticed  in  passing,  (i)  There  are  important  offsets 
to  the  brilliant  promise  which  there  is  for  mankind  in  a  period 
during  which,  for  the  whole  civilized  world,  there  will  be  a  wide 
margin  of  ease  between  the  existing  population  and  the  sup- 
porting power  of  the  available  land.  These  offsets  consist  in 
the  effects  of  ignorance,  error,  and  folly — the  same  forces  which 
have  always  robbed  mankind  of  half  what  they  might  have  en- 
joyed on  earth.  Extravagant  governments,  abuses  of  public 
credit,  wasteful  taxation,  legislative  monopolies  and  special 
privileges,  juggling  with  currency,  restrictions  on  trade,  wasteful 
armaments  on  land  and  sea,  and  other  follies  in  economy  and 
state-craft,  are  capable  of  wasting  and  nullifying  all  the  gains  of 
civilization.  (2)  The  old  classical  civilization  fell  under  an  ir- 
ruption of  barbarians  from  without.  It  is  possible  that  our  new 
civilization  may  perish  by  an  explosion  from  within.  The  sen- 
timentalists have  been  preaching  for  a  century  notions  of  rights 
and  equality,  of  the  dignity,  wisdom,  and  power  of  the  prole- 
tariat, which  have  filled  the  minds  of  ignorant  men  with  impos- 
sible dreams.  The  thirst  for  luxurious  enjoyment  has  taken 
possession  of  us  all.  It  is  the  dark  side  of  the  power  to  fore- 
see a  possible  future  good  with  such  distinctness  as  to  make  it 
a  motive  of  energy  and  persevering  industry — a  power  which  is 
distinctly  modern.  Now  the  thirst  for  luxurious  enjoyment, 
when  brought  into  connection  with  the  notions  of  rights,  of 
power,  and  of  equality,  and  dissociated  from  the  notions  of  in- 
dustry and  economy,  produces  the  notion  that  a  man  is  robbed  of 
his  rights  if  he  has  not  everything  that  he  wants,  that  he  is 
deprived  of  equality  if  he  sees  any  one  have  more  than  he  has, 
and  that  he  is  a  fool  if,  having  the  power  of  the  state  in  his 
hands,  he  allows  this  state  of  things  to  last.  Then  we  have 
socialism,  communism,  and  nihilism  ;  and  the  fairest  conquests  of 
civilization,  with  all  their  promise  of  solid  good  to  man,  on  the 
sole  conditions  of  virtue  and  wisdom,  may  be  scattered  to  the 
winds  in  a  war  of  classes,  or  trampled  under  foot  by  a  mob 
which  can  only  hate  what  it  cannot  enjoy. 

It  must  be  confessed  that  sociology  is  yet  in  a  tentative  and 

21 


322  THE  PRINCETON  REVIEW. 

inchoate  state.  All  that  we  can  affirm  with  certainty  is  that 
social  phenomena  are  subject  to  law,  and  that  the  natural  laws 
of  the  social  order  are  in  their  entire  character  like  the  laws  of 
physics.  We  can  draw  in  grand  outline  the  field  of  sociology 
and  foresee  the  shape  that  it  will  take  and  the  relations  it  will 
bear  to  other  sciences.  We  can  also  already  find  the  stand- 
point which  it  will  occupy,  and,  if  a  figure  may  be  allowed, 
altho  we  still  look  over  a  wide  landscape  largely  enveloped  in 
mist,  we  can  see  where  the  mist  lies,  and  define  the  general 
features  of  the  landscape,  subject  to  further  corrections.  To 
deride  or  contemn  a  science  in  this  state  would  certainly  be  a 
most  unscientific  proceeding.  We  confess,  however,  that  so 
soon  as  we  go  beyond  the  broadest  principles  of  the  science  we 
have  not  yet  succeeded  in  discovering  social  laws,  so  as  to  be 
able  to  formulate  them.  A  great  amount  of  labor  yet  remains 
to  be  done  in  the  stages  of  preparation.  There  are,  however, 
not  more  than  two  or  three  other  sciences  which  are  making  as 
rapid  progress  as  sociology,  and  there  is  no  other  which  is  as 
full  of  promise  for  the  welfare  of  man.  That  sociology  has  an 
immense  department  of  human  interests  to  control  is  beyond 
dispute.  Hitherto  this  department  has  been  included  in  moral 
science,  and  it  has  not  only  been  confused  and  entangled  by 
dogmas  no  two  of  which  are  consistent  with  each  other,  but  also 
it  has  been  without  any  growth,  so  that  at  this  moment  our 
knowledge  of  social  science  is  behind  the  demands  which  exist- 
ing social  questions  make  upon  us.  We  are  face  to  face  with 
an  issue  no  less  grand  than  this :  Shall  we,  in  our  general  social 
poHcy,  pursue  the  effort  to  realize  more  completely  that  consti- 
tutional liberty  for  which  we  have  been  struggling  throughout 
modern  history,  or  shall  we  return  to  the  mediaeval  device  of 
functionaries  to  regulate  procedure  and  to  adjust  interests? 
Shall  we  try  to  connect  with  liberty  an  equal  and  appropriate 
responsibility  as  its  essential  complement  and  corrective,  so  that 
a  man  who  gets  his  own  way  shall  accept  his  own  consequences, 
or  shall  we  yield  to  the  sentimentalism  which,  after  preaching- 
an  unlimited  liberty,  robs  those  who  have  been  wise  out  of 
pity  for  those  who  have  been  foolish  ?  Shall  we  accept  the 
inequalities  which  follow  upon  free  competition  as  the  defini- 
tion of  justice,  or  shall  we  suppress  free  competition   in   the 


SOCIOLOGY.  323 

interest  of  equality,  and  to  satisfy  a  baseless  dogma  of  justice? 
Shall  we  try  to  solve  the  social  entanglements  which  arise 
in  a  society  where  social  ties  are  constantly  becoming  more 
numerous  and  more  subtle,  and  where  contract  has  only  partly 
superseded  custom  and  status,  by  returning  to  the  latter,  only 
hastening  a  more  complete  development  of  the  former?  These 
certainly  are  practical  questions,  and  their  scope  is  such  that 
they  embrace  a  great  number  of  minor  questions  which  are 
before  us  and  which  are  coming  up.  It  is  to  the  science  of 
society,  which  will  derive  true  conceptions  of  society  from  the 
facts  and  laws  of  the  social  order,  studied  without  prejudice  or 
bias  of  any  sort,  that  we  must  look  for  the  correct  answer  to 
these  questions.  By  this  observation  the  field  of  sociology  and 
the  work  which  it  is  to  do  for  society  are  sufficiently  defined. 

William  G.  Sumner. 


VALE  COLLEGE 

LOAN  LIBRARY 
or  Political  Economy. 


November,  1882. 


WAGES. 

ONE  may  read,  in  scores  of  books  and  articles,  that  political 
economy  is  going  through  a  transition  stage.  The  infer- 
ence appears  to  be  that  the  period  is  a  convenient  one  for  any 
one  who  chooses  to  do  so  to  contribute  some  crude  notions  to  the 
prevaiHng  confusion.  It  is  certainly  true  that  there  is  no  body 
of  economists  engaged  in  carrying  on  the  science  of  political 
economy  by  a  consistent  development  of  its  older  results 
according  to  such  new  light  as  can  be  brought  to  bear  upon 
them.  The  science  is  exposed  to  the  derision  and  flippant  jests 
of  those  whose  vested  interest  in  old  abuses  is  threatened  by  it, 
and  it  has  forfeited  its  influence  in  the  counsels  of  legislators 
and  the  cabinets  of  statesmen  because  those  who  call  them- 
selves economists  are  busy  in  turning  economic  science  to  scorn. 
Every  science  suffers  more  or  less  from  men  who  meddle  with 
it  without  mastering  it,  and  from  those  who  think  carelessly, 
generalize  rashly,  or  make  concessions  hastily;  but  a  progres- 
sive science  is  always  in  the  control,  in  the  last  resort,  of  a  body 
of  competent  scholars  who  correct  aberrations,  and  every  such 
science  possesses  a  body  of  criticism  which  is  strong  enough  to 
repress  presuming  ignorance  and  charlatanism.  Political  econ- 
omy is  in  no  such  position.  A  host  of  writers  have  been  busy 
for  the  last  twenty  years  introducing  conflicting  and  baseless 
notions  which,  for  want  of  a  competent  criticism,  have  won 
standing  in  the  science.  Others  have  made  a  boast  of  turning 
their  backs  on  scientific  method,  and  of  describing,  by  way  of 
contributing  to  political  economy,  some  portion  of  the  surface 
appearance  which  is  presented  by  the  mass  of  economic  phe- 
nomena in  their  sequence,  variety,  and  complexity.  That  is  as 
if  a  historian  should  boast  of  abandoning  the  attempt  to  trace 
17 


242  THE  PRINCETON  REVIEW. 

social  forces  in  history,  and  of  returning  to  the  description  of 
royal  marriages  and  diplomatic  intrigues.  With  all  this  the  new- 
school  has  been  by  no  means  moderate  in  its  terms  of  contempt 
for  all  who  did  not  accept  the  decree  that  Smith,  Ricardo,  and 
Mill  were  exceptional  imbeciles  to  adopt  and  teach  the  old 
doctrines.  I  confess,  for  one,  that  for  some  years  the  writers  of 
the  new  school  imposed  on  me  not  a  little  by  their  airs  of  con- 
fidence and  superiority.  It  seemed  to  me  that  I  could  perceive 
the  errors  into  which  they  had  fallen,  the  emptiness  of  their 
objections,  the  crude  and  unscientific  character  of  their  think- 
ing ;  but  I  was  forced  to  doubt  and  hesitate  lest  it  might  be  I 
who  was  at  fault. 

For  an  example  I  will  not  take  a  small  case  or  an  extreme 
case.  I  will  take  an  example  of  a  very  interesting  and  valuable 
book  by  one  of  the  best  living  writers  on  political  economy,  but 
one  who  has,  in  my  opinion,  made  unfounded  and  improper 
concessions  on  important  economic  doctrine.  Leroy-Beaulieu' 
has  not  been  able  to  escape  the  fascination  of  the  longing  for 
equality,  and  he  declares  his  conclusion  that  Ricardo's  doctrine 
of  rent  has  no  application  at  present  because  of  the  immense 
amount  of  new  land  which  has  become  available,  and  that  the 
Malthusian  doctrine  of  population  has  no  application  because 
improvements  in  the  arts  are  lowering  the  cost  of  subsistence 
in  spite  of  the  increase  of  population.  Further  on  I  shall  notice 
some  of  the  same  writer's  views  about  wages. 

In  the  first  place,  the  question  What  is  true?  is  one  thing,  and 
the  question  of  applicability  to  a  given  case  is  another.  The 
former  question  is  the  one  which  is  the  concern  of  the  scientific 
man.  There  is,  however,  another  and  more  important  view  of 
the  objections  raised  by  the  French  economist. 

In  all  our  sciences  we  are  forced  to  investigate  ratios  at  the 
limit  or  other  features  of  limiting  cases.  The  older  economists 
did  this  without  having  analyzed  their  processes  sufficiently  to 
classify  them.  The  Ricardian  law  of  rent  is  stated  as  a  limiting 
case  in  the  operation  of  the  diminishing  return  from  land.  In 
any  such  statement  the  amount  of  land  and  the  stage  of  the 

'  Essai  sur  la  Repartition  des  Richesses  et  sur  la  Tendance  ^  une  Moindre 
Inegalit6  des  Conditions,  par  Paul  Leroy-Beaulieu.     Paris:  Guillaumin  et  Cie. 
1881. 


WAGES.  245 

arts  must  be  constant  quantities.  When  the  statement  is 
derived  from  the  limiting  case  it  is  used  in  political  economy, 
as  in  all  other  sciences,  by  giving  all  values  to  the  variables. 
Therefore  the  Ricardian  law  of  rent  applies  to  all  cases  whatso- 
ever from  Minnesota  to  Connaught.  If  we  change  the  con- 
stants, either  by  getting  more  land  or  by  advancing  the  arts,  we 
produce  no  change  whatever  in  the  law,  but  only  transfer  its 
operation  to  another  plane.  As  I  regard  it,  M.  Leroy-Beaulieu 
has  fallen  into  the  error  of  regarding  a  change  in  the  constant  as 
setting  aside  the  law.  The  law  of  population  is  stated  in  terms 
of  a  limiting  ratio  between  population  and  subsistence,  land  and 
the  stage  of  the  arts  being  constant.  In  its  simplest  terms  the 
law  is  that  the  mortality  and  the  increase  of  population  are  in 
equilibrium  at  the  limit.  M.  Leroy-Beaulieu  says  that  the  law 
is  set  aside  because  we  are  not  at  the  limit ;  but  the  law  evi- 
dently covers  all  cases  whatsoever,  and  to  say  that  it  does  not 
apply  is  like  saying  that  men  are  not  under  conditions  of  heat 
because  they  are  not  being  either  roasted  or  frozen.  Whole 
libraries  of  books  have  been  written,  by  way  of  criticism  on  the 
doctrines  of  political  economy,  whose  argument  consists  in 
showing  that  human  societies  are  rarely  at  the  limit,  or  that 
limiting  cases  rarely  or  never  occur.  It  seems  to  me,  therefore, 
that  the  responsibility  ought  to  be  strictly  enforced  against 
men  of  standing  in  the  science  for  concessions  which  introduce 
confusion,  set  the  popularizers  all  astray,  and  make  greater  the 
task  of  those  who  are  striving  to  secure  the  appreciation  of 
sound  doctrine.  The  men  of  the  new  school  have  scarcely  met 
with  any  contradiction  for  the  last  ten  years.  They  have  had 
things  all  their  own  way.  The  effects  of  their  teachings  are  to  be 
met  with  in  newspapers  and  popular  writings.  I  am,  however, 
one  of  those  who  believe  that  all  this  activity  of  the  new  school 
has  been  in  the  way  of  confusion  and  mischief.  I  do  not  doubt 
that  we  can  to-day,  with  the  aid  of  wider  social  philosophy  and 
more  careful  study,  expand  and  correct  the  doctrines  of  our 
science.  We  can  advance  it  by  an  orderly  and  strictly  genetic 
development.  Any  one  who  tries  to  advance  it  otherwise  may 
be  an  apostle  or  a  prophet ;  he  is  not  a  man  of  science. 

I  now  propose  to  re-examine  the  subject  of  wages. 

The  origin  of  capital  is  lost  in  the  obscurity  which  covers 


244  THE   PRINCETON  REVIEW. 

the  first  beginnings  of  civilization.  Some  faint  presages  of 
capital  are  to  be  noted  amongst  brutes.  We  are  told  that  a 
gorilla  has  been  seen  to  take  up  a  stick  with  which  to  defend 
himself  when  attacked.  It  is  related  that  a  monkey  in  a 
zoological  garden  used  a  stone  to  crack  a  nut,  and  hid  the  stone 
under  the  straw  so  as  to  have  it  ready  on  the  next  occasion. 
Beasts,  however,  with  such  extraordinary  exceptions,  live  on 
the  spontaneous  products  of  the  earth,  which  they  consume  as 
they  find  them,  and  which  they  obtain  without  tools  or  weapons. 
Such  must  also,  at  some  time,  have  been  the  condition  of 
man.  In  that  stage  of  life  alone  could  a  man  subsist  on  the 
immediate  product  of  his  labor.  His  labor  consisted  purely  in 
an  act  of  appropriation  of  the  spontaneous  fruits  of  the  earth, 
which  he  consumed  as  he  obtained  them. 

There  is  one  tool-weapon  given  in  nature — the  flint ;  and  there 
is  one  natural  agent  which  man  learned  to  use  so  early  that  we 
can  find  no  period  when  it  was  not  in  use — fire.  Accident  was 
the  leading  factor  in  the  earliest  stage  of  civilization.  All  that 
we  know  of  primitive  men  warns  us  not  to  believe  that,  if  one 
man  found  a  flint-knife,  his  comrades  quickly  took  up  the  deter- 
mination to  acquire  something  of  the  same  kind.  The  evidence 
all  imposes  upon  us  the  conviction  that  the  period  during  which 
the  first  steps  towards  capital,  by  the  use  of  flints  and  fire,  were 
being  made  must  have  been  so  long  and  painful  that  we  cannot 
appreciate  it.  It  is  probable  that  steps  forward  were  made  only 
where  population  was  dense  enough  to  make  effort  necessary, 
and  not  dense  enough  to  produce  degeneration  or  distress. 
During  that  period  the  developments  of  rudimentary  civilization 
must  have  been  erratic  and  uncertain.  Whenever  any  man  or 
men,  stimulated  by  perceiving  the  advantages  which  a  man 
enjoyed  who  owned  a  flint-knife,  and  unable  to  conquer  him  and 
take  it  away  from  him,  undertook  to  acquire  one,  not  by  acci- 
dent but  of  set  purpose,  such  persons  were  driven  either  to 
accumulate  a  store  of  food  which  would  support  life  while 
searching  for  flints,  or  to  go  hungry  while  prosecuting  that 
search.  In  either  case  the  price  of  advance  was  the  acquisition 
of  capital  by  self-denial.  From  that  stage  of  things  up  to  the 
present  moment  it  is  true,  leaving  accident  out  of  account,  that 
every  step  of  advance  by  which  man  has  raised  hivisclf  abcwe  tJic 


WAGES.  245 

level  of  other  animals  has  been  won  by  standing  on  a  past  self- 
denial,  i.e.  capital.  Capital  is,  like  every  other  good,  only  a 
chance.  Man  may  abuse  it  to  his  destruction  or  may  use  it  for 
his  advancement.  That  is  where  the  moral  deduction  comes  in, 
with  which  the  economist  has  nothing  to  do,  but  the  converse 
of  the  above  proposition  admits  of  absolute  statement :  Every 
diminution  of  capital  lowers  civilization  without  any  possible 
alternative,  and,  in  its  measure,  carries  the  race  back  towards 
the  primitive  barbarism.  Labor  and  self-denial,  to  work  yet 
abstain  from  enjoying,  to  earn  a  product  yet  work  on  as  if  one 
possessed  nothing,  have  been  the  conditions  of  advance  for  the 
human  race  from  the  beginning,  and  they  continue  to  be  such 
still.  From  the  beginning  capital  has  been  multiplied  into  itself 
in  a  constant  involution.  It  is  labor  raised  to  a  higher  power 
and  concentrated,  and  it  is  by  this  accumulation  that  man  has 
gained  the  disposition  of  power  enough,  capable  of  concentra- 
tion on  a  given  point,  to  accomplish  all  his  victories  over  nature. 
From  the  flint-knife  up  to  the  breech-loading  rifle  and  the  ocean 
steamer  every  step  of  the  development  is  open  to  our  observa- 
tion, and  not  a  single  step  in  the  sequence  could  be  omitted  or 
put  in  another  position  without  making  the  result  impossible. 

The  extension  of  our  political  economy  which  is  most  essen- 
tial is  the  investigation  of  the  element  of  time,  and  a  specifica- 
tion of  its  value  and  relation  in  each  of  our  generalizations. 
Already  in  the  above  sketch  of  the  development  of  capital  it  is 
apparent  that  the  relations  of  time  are  of  the  first  importance. 
The  work  of  mankind  on  low  stages  of  civilization  is  irregular 
and  unmethodical,  but  by  the  time  that  the  agricultural  stage  is 
reached  the  successive  periods  of  production  repeat  themselves 
with  the  regularity,  because  according  to  the  necessity,  of  the 
seasons.  Capital  is  the  product  of  the  past  season.  The  work 
of  the  present  season  cannot  go  on  without  it,  and  it  is  not  pres- 
ent unless  the  past  period  has  been  industriously  employed. 
The  future  enjoyment,  in  its  turn,  depends  on  the  industry  of 
the  present.  The  capital,  moreover,  in  each  period  of  produc- 
tion must  be  consumed ;  that  is,  used  up  and  sacrificed.  It 
must  be  sought  again  in  the  new  product  at  the  end  of  the  pres- 
ent period  of  production,  but  in  the  interval  it  must  be  suffered 
to  pass  away  and  disappear.      The  element  of  risk  therefore 


246  THE  PRINCETON  REVIEW. 

belongs  to  the  nature  of  capital,  and  the  work  of  mankind  goes 
on  in  a  series  of  pulsations  in  which  the  capital  is  consumed  and 
sought  again  with  increase  in  an  endless  series  of  reproductions. 

On  the  hunting  stage  each  man  participates  in  the  work  and 
in  the  enjoyment.  On  the  pastoral  stage  we  already  find  cases 
in  which  men  are  left  outside  of  any  family  connection  and 
without  cattle,  the  most  essential  form  of  capital.  Such  men, 
if  not  adopted  into  a  family,  and  others  who  voluntarily  take 
such  a  course,  serve  others  who  can  give  them  a  social  status 
(security)  and  a  share  in  the  means  of  subsistence.  In  the  early 
stages  of  the  agricultural  stage  each  man  tills  land  for  himself, 
and,  so  long  as  the  land  is  abundant,  new-comers  simply  take  up 
more  of  it.  In  such  a  state  of  society,  which  is  repeated  sub- 
stantially in  all  new  countries,  there  is  no  class  of  persons  who 
labor  for  others  for  hire.  If  any  do  this  in  their  youth,  or  for  a 
few  years,  they  speedily  acquire  the  small  amount  of  capital  nec- 
essary, in  that  stage  of  society,  for  tilling  land,  and  become  in- 
dependent land-owners.  As  the  population  increases,  however, 
the  stage  of  the  arts  being  assumed  constant  and  land  being- 
taken  constant  in  amount  (viz.,  such  an  amount  as  is  available 
for  the  use  of  a  given  society,  whether  it  be,  on  that  stage  of  the 
arts,  a  square  mile  or  the  whole  earth),  increments  of  subsistence 
must  be  won  at  greater  cost  of  labor  and  sacrifice.  The  society 
is  therefore  forced  to  higher  and  higher  organization  because 
higher  organization  with  differentiation  of  function  increases 
production.  As  this  movement  goes  on  the  society  becomes 
more  and  more  complex ;  the  stake  of  each  one  in  the  stability 
of  the  organization  is  greater  and  greater,  and  whole  classes 
arise  which  perform  remote  and  incidental  functions  which 
would  not  exist  at  all  in  a  less  developed  social  system.  In  such 
a  society  a  class  of  persons  comes  into  existence  who  have  no 
capital  and  no  land.  They  must  subsist  from  day  to  day  out  of 
the  existing  capital  of  the  society  by  obtaining  that  capital  from 
the  owners  of  it  through  some  form  of  voluntary  agreement. 

The  English  economists  speak  of  the  gain  from  the  poorest 
land  in  cultivation  as  equal  to  current  wages  and  profits.  That 
they  should  have  regarded  wages  and  profits  as  positive  data  or 
known  quantities  is  not  strange  in  view  of  their  situation  and 
the  circumstances  of  their  country.     There  are  in  fact  no  posi- 


WAGES.  247 

tive  data  in  economics  from  which  results  may  be  deduced  as 
unknown  are  derived  from  known  quantities.  We  have  to  ac- 
custom ourselves  to  think  of  the  industrial  system  as  in  con- 
stant flux  and  readjustment.  The  elements  of  the  system  are 
numerous  and  are  subject  to  constant  variations  in  quantity  and 
in  their  relations  to  each  other.  They  are  constantly  moving, 
so  that  all  forces  which  are  produced  in  the  system  are  dis- 
tributed and  taken  up  throughout  the  whole  of  it,  so  that  every 
part  is  affected.  A  man  of  scientific  training  who  studies  society 
can  no  more  doubt  that  this  is  true  than  he  could  doubt 
its  truth  as  a  general  doctrine  of  the  physical  universe,  altho 
society  is  more  complex  and  its  phenomena  elude  our  investiga- 
tion more  completely.  No  doubt,  taking  a  certain  period,  say 
a  decade,  into  account,  the  existing  ratio  of  product  from  the 
poorest  land  in  cultivation  to  the  labor  and  capital  which  must 
be  expended  on  that  land  in  the  existing  stage  of  the  arts  sets 
the  general  limit  of  the  status  of  the  lowest  class  of  the  popula- 
tion, from  which  the  status  of  other  classes  is  established  in  the 
proportion  of  what  they  contribute  by  their  labor  and  capital  to 
the  total  product  of  the  country.  In  a  new  country  where  land 
can  be  tilled  with  a  minimum  of  capital  and  a  minimum  organ- 
ization of  labor,  any  able-bodied  man  can  obtain  it  and  can  win 
from  it  all  the  essentials  of  subsistence.  To  such  a  man  the  re- 
lation of  wages  to  land  is  presented  as  an  open  alternative. 
There  is  no  class,  in  such  a  country,  of  men  who  are  driven,  by 
the  necessity  of  living,  into  a  desperate  competition  with  each 
other,  without  reserve,  to  get  a  share  in  the  capital  of  the  so- 
ciety. Women  do  compete  with  each  other  without  the  alter- 
native. This  is  one  of  the  chief  reasons  why  their  earnings  are 
less  than  those  of  men  in  similar  cases.  In  such  a  country 
there  will  be  only  an  imperfectly  differentiated  wages  class.  The 
minimum  of  wages,  where  wages  are  paid,  must  be  such  as  will 
give,  all  things  considered,  as  good  a  return  of  cpmfort  as  can 
be  won  directly  from  the  land.  Since  the  latter  return  is  great, 
wages  must  be  high.  Such  is  the  state  of  the  case  at  the  pres- 
ent time  in  the  United  States.  On  the  other  hand,  a  country 
whose  population  is  so  great  that  the  last  increment  of  subsis- 
tence must  be  won  from  soils  which  require  a  great  expenditure 
of  labor  and  capital  to  win  a  meagre  supply  of  the  means  of  sub- 


248  THE  PRINCETON  REVIEW. 

sistence  per  head  of  the  laborers  must  have  a  class  of  persons 
always  on  the  verge  of  distress.  As  the  use  of  such  soils  re- 
quires a  large  expenditure  of  capital,  the  laborers  engaged  upon 
it  are  employed  by  hire,  and  their  status  fixes  a  minimum  of 
wages  for  manual  labor. 

Let  us  now  vary  the  constants,  the  amount  of  land  and  the 
stage  of  the  arts.  It  is  plain  that  we  immediately  widen  the 
margin  of  ease  still  further  in  the  new  country,  and  that  we  im- 
mediately relax  the  stringency  of  the  situation  in  the  old  coun- 
try. That  is  why  civilization  has  advanced,  and  why  we  are  now 
striving  all  the  time  to  win  progress  in  the  arts.  If  the  advance 
should  be  won  as  a  single  isolated  step,  it  would  bring  relief  for 
a  time  to  all  and  an  enlarged  chance  to  all,  but  the  law  itself 
would  not  change  at  all ;  and  if  the  population  increased  until  it 
had  absorbed  all  the  advantage  which  had  been  won,  the  same 
results  as  before  would  be  repeated.  At  the  present  time  the 
unoccupied  land  of  the  earth  is  brought  within  such  easy  reach 
of  all  civilized  men  that  there  is  no  reason,  save  in  the  negli- 
gence of  the  classes  interested  themselves,  why  there  should  be 
any  class  of  persons  in  the  civilized  world  directly  dependent  on 
hire.  The  greatest  mischief  of  all  socialistic  and  semi-socialistic 
teaching  is  that  it  teaches  the  classes  in  question  not  to  avail 
themselves  by  their  own  energy  of  the  chances  which  are  open 
to  them,  but  to  stay  where  they  are  and  expect  somebody  else 
to  make  them  happy  there. 

In  a  village  community  each  man  addressed  himself  directly 
to  the  soil  to  get  out  of  it  the  means  of  subsistence.  If  then  he 
failed  for  any  reason  whatsoever,  he  could  only  blame  himself 
or  nature.  In  our  highly  organized  society  we  are  all  bound  to 
each  other  in  various  relations  while  trying  to  win  subsistence. 
The  struggle  for  existence,  therefore,  which  formerly  had  the 
character  of  a  struggle  of  man  with  nature,  now  has  the  char- 
acter of  a  struggle  of  man  with  man,  and  a  "  social  question" 
arises  whenever  a  man  is  dissatisfied  with  the  return  which  he 
wins  from  the  social  co-operative  effort.  For  instance :  If  a 
man  were  working  by  himself  as  a  wheelwright  and  selling  his 
wagons,  he  would  have  to  put  up  with  the  best  return  which  his 
labor  and  capital  could  win.  If  he  could  find  any  other  trade 
which  he  could  adopt  and  which  would  pay  better,  he  would 


WAGES.  249 

change.  If,  however,  a  capitalist  employed  wheelwrights  and 
sold  wagons,  and  if  the  trade  should  not  bring  back  the  capital 
and  profits,  the  employer  would  either  discharge  men  or  lower 
wages.  This  is  the  form  in  which,  under  the  social  organization, 
the  warning  would  come  to  the  men  that  a  redistribution  of 
labor  was  required,  but  it  would  appear  to  them  to  be  the  act 
of  the  employer.  Similar  observations  would  hold  of  scores  of 
other  cases  in  which  the  ills  of  earthly  Hfe  come  to  us  as  mis- 
deeds of  our  neighbors  towards  us,  on  account  of  the  relations 
in  which  we  stand  in  the  industrial  organization. 

Supply  and  demand,  in  the  last  analysis,  are  only  so  much 
need  of  subsistence  and  so  many  resources  of  subsistence,  or,  in 
other  words,  they  are  only  the  forms  which  are  taken  in  the 
social  organization  by  the  original  need  of  man  addressed  to 
nature  on  the  one  side,  and  the  stores  of  nature  open  to  the 
effort  of  man  on  the  other.  An  isolated  man  would  find  the  de- 
mand in  his  brain  and  the  supply  by  his  hand.  When  the  sup- 
ply had  produced  satisfaction  the  demand  would  arise  again,  and 
the  reactions  between  the  man  and  his  environment  would  be 
repeated  as  long  as  he  lived.  In  a  primitive  society  a  man  who 
needed  food  exerted  himself  to  get  it  from  nature  by  some 
direct  effort.  A  "just"  return  for  his  effort  was — what  he  got. 
Under  division  of  labor  and  exchange,  even  up  to  the  last  re- 
finements of  our  modern  industrial  organization,  it  is  still  true 
that  the  society  develops  needs  and  addresses  its  efforts  to 
nature  to  try  to  win  satisfaction,  but  every  man  is  forced  to 
reach  nature  through  a  multitude  of  relations  with  his  fellow- 
man.  We  stand  in  a  double  relation  as  suppliers  and  demanders 
around  the  one  pile  of  goods  which  our  organized  effort  has 
won  from  the  earth  and  advanced  into  a  shape  to  satisfy  human 
needs.  Hence  every  exchange  involves  two  articles,  each  under 
two  different  relations.  One  article  is  supply  to  A  and  demand 
to  B,  while  the  other  article  is  demand  to  A  and  supply  to  B. 
Hence  demand  and  supply  are  the  relations  which  bind  men  to- 
gether into  a  human  society  for  co-operation  and  high  organiza- 
tion in  a  joint  effort  to  win  the  supplies  of  life.  The  lowest 
terms  to  which  any  exchange  can  be  reduced  are  therefore 
represented  by  two  curves  cutting  each  other;  that  is  to  say,  by 
two  simultaneous  equations  between  two  variables.     Even  then 


250  THE  PRINCETON  REVIEW. 

we  have  only  a  representation  of  an  instantaneous  transaction. 
If  we  take  into  account  successive  transactions  and  variations  in 
supply  and  demand,  we  must  introduce  the  element  of  time. 
We  should  then  have  to  use  the  third  dimension  to  represent 
the  case,  and  after  all  we  should  have  only  an  empirical,  statis- 
tical, or,  as  we  might  call  it,  a  statical,  representation  of  supply 
and  demand.  If  we  should  attempt  any  analysis  of  supply  and 
demand  regarded  dynamically,  we  should  also  have  to  use  the 
element  of  time  ;  and  if  we  made  such  an  attempt,  we  should 
find  ourselves  doomed  to  inevitable  failure.  It  is  not  possible  to 
analyze  supply  and  demand.  Why  does  A  offer  wheat  for  $l 
and  B  bid  only  99  cts.  for  it  ?  These  are  secrets  of  the  con- 
sciousness of  the  parties.  One  or  both  of  them  may  be  led  by 
considerations  which  are  erroneous.  That  will  not  affect  the 
influence  of  his  bid  on  the  market.  The  economist  can  do  no 
more  than  to  note  the  bid  when  it  is  made  as  a  contribution 
to  the  making  of  the  price.  The  reasons  for  it  he  cannot  dis- 
cover. The  most  that  he  can  do  towards  the  analysis  of  supply 
and  demand  is  to  study  the  facts  and  circumstances  which,  by 
general  tendency,  go  to  make  the  supply  of  a  given  commodity, 
or  the  demand  for  it,  greater  or  smaller.  Indeed  this  is  the 
only  thing  which  it  is  of  importance  for  us  to  know.  Supply 
and  demand  are  together  the  ultimate  force  or  fact  to  the  econo- 
mist. They  are  to  him  what  gravity  is  to  the  astronomer  or 
chemical  affinity  to  the  chemist.  We  want  to  know  the  mode 
of  their  action,  but  the  reason  of  it  is  beyond  our  reach.  Supply 
and  demand  act  to  clear  the  market.  If  there  were  a  closed 
market  and  a  sale  without  reserve,  supply  and  demand  would 
just  distribute  all  the  commodities  on  the  market.  Supply  and 
demand  would  not  give  each  person  what  he  would  like  to  have, 
nor  satisfy  any  ideal  desires,  any  more  than  a  man  who  ad- 
dresses himself  directly  to  nature  in  the  first  instance  gets  what 
he  would  like  to  have,  but,  if  they  act  freely,  supply  and  demand 
distribute  commodities  so  that  a  given  amount  shall  produce  a 
maximum  of  satisfaction  to  the  community  between  whose  mem- 
bers the  exchanges  are  made.  At  that  point  supply  and  demand 
would  be  in  equilibrium  and  no  further  transactions  would  be 
made.  In  a  simple  society,  with  exchanges  at  country  fairs,  this 
state  of  things  was  reached.  In  our  modern  society,  in  which  pro- 


irAGES.  251 

duction,  exchange,  and  consumption  never  cease,  the  conditions 
of  the  market  constantly  change  and  never  cease,  so  that  sup- 
ply and  demand  move  on  towards  an  equilibrium  which  is  never 
realized  because  the  conditions  of  it  are  constantly  changed. 
What  then  is  "justice"  in  this  connection?  The  distribution 
which  takes  place  under  the  free  play  of  supply  and  demand 
gives  us  our  definition  of  justice  as  applied  to  the  contribution 
which  an  individual  puts  into  the  social  effort  and  the  share  he 
gets  out  of  the  social  product.  There  is  no  other  definition  of 
justice  which  can  be  seriously  considered. 

There  are  two  sources  of  confusion  which  must  now  be  cor- 
rected. 

1.  The  first  is  the  definition  of  wages.  If  wages  mean  the 
remuneration  of  labor,  then  wages  are  a  chief  class,  and  we  must 
distinguish  between  payment  by  the  piece,  contract  wages,  de- 
ferred wages,  store  pay,  etc.  etc.,  as  sub-classes.  If  we  make 
the  definition  of  wages  to  fit  contract  wages,  then  the  remuner- 
ation of  labor  will  be  a  chief  class,  and  we  must  distinguish 
between  wages,  payment  by  the  piece,  store  pay,  etc.  etc.,  as 
sub-classes.  Either  classification  is  legitimate  if  it  is  faithfully 
observed  throughout,  but  if  any  ambiguity  is  allowed  to  creep 
in  it  will  produce  the  logical  errors  of  a  double  definition  and 
confusion  between  a  chief  class  and  a  sub-class.  These  logical 
errors  run  through  a  great  deal  of  the  controversial  literature 
about  wages,  and  when  they  are  cleared  away  a  great  part  of 
the  controversy  falls  to  the  ground.  The  second  of  the  above 
classifications  is  by  far  the  best,  because  it  allows  of  a  defini- 
tion of  wages  which  conforms  to  the  popular  use  of  the  term. 
Wages  arc  a  payment  per  unit  of  time  by  the  employer,  in  return 
for  which  the  employee  agrees  to  use  his  prodtictive  powers  during 
the  time  specified  as  the  employer  may  direct.  I  use  the  word 
under  this  definition  only. 

2.  In  the  works  of  Mill  and  the  other  authorities  there  is  a 
confusion  as  to  the  source  from  which  wages  are  paid  which  is,  I 
think,  one  chief  cause  of  all  the  controversy  which  has  arisen  on 
this  subject.  It  is  distinctly  taught  under  the  head  of  wages 
that  the  demand  for  labor  is  capital,  and  that  wages  are  paid  out 
of  capital.  Under  the  head  of  distribution  it  is  said  that  the 
product  is  divided  into  wages,  profits,  and  rent,  from  which  it 


252  THE  PRINCETON  REVIEW. 

would  follow  that  wages  are  paid  out  of  product.  Leroy-Beau- 
lieu  describes  the  employment  of  capital  to  sustain  labor  dur- 
ing production  with  great  minuteness  (pp.  366-70),  and  then 
declares  summarily  that  the  only  "  wage-fund "  is  "  the  total 
annual  production  minus  what  is  necessary  to  maintain  capital " 
(p.  382).  Ricardo  held  that  profits  and  wages  are  the  leavings 
of  each  other.  Later  economists  have  generally  rejected  this 
doctrine,  but  even  those  of  them  who  maintain  that  wages  are 
paid  out  of  capital  fall  back  into  arguments  which  imply  its 
truth.  For  instance,  Cairnes,  who  earnestly  maintained  that 
capital  is  divided  into  wages,  raw  material,  and  fixed  capital, 
argued  that  trades-unions  could  not  increase  the  wages  in  the 
several  trades,  because,  if  they  did  so,  they  would  reduce  profits 
below  the  rate  which  would  make  investment  worth  while.  On 
his  own  doctrine,  increased  wages  could  not  trench  on  profits. 
He  should  have  argued  that  wages,  if  increased  by  a  trades- 
union,  could  only  be  increased  at  the  expense  of  raw  material 
or  fixed  capital,  which  would  be  far  more  difficult  than  to  in- 
crease them  at  the  expense  of  profits.  Indeed  if  the  trades- 
union  movement  did  not  coincide  with  a  new  distribution  of 
capital  into  its  three  parts  (a  new  distribution  which  would  pro- 
duce a  rise  in  wages),  the  trades-union  could  not  possibly  force 
an  advance  at  the  expense  of  raw  materials  or  fixed  capital. 
We  shall  see  further  on  that  wages  and  profits  are  not  the  leav- 
ings of  each  other,  because  they  are  not  parts  of  the  same  whole. 
If  we  could  arrest  the  production  and  consumption  of  wealth 
in  the  United  States  at  a  given  moment  of  time  and  take  an 
inventory  of  all  the  wealth  at  that  moment  existing,  it  is  evi- 
dent that  it  would  be  an  exact  arithmetical  quantity.  It 
would  be  what  the  combined  industry,  economy,  extravagance, 
folly,  and  idleness  of  all  past  time  on  the  part  of  the  American 
people  had  made  it.  It  would  be  less  because  we  have  had 
a  civil  war,  a  protective  tariff,  a  paper-money  crisis,  fires  at 
Chicago  and  Boston,  etc.  etc.,  than  it  would  have  been  if  our 
public  policy  had  been  wiser  and  our  misfortunes  less.  What- 
ever the  existing  wealth  might  be,  no  regrets  could  carry  us 
back  to  increase  it  by  a  grain  of  wheat  or  a  pound  of  iron  be- 
yond what  it  was  at  the  moment  supposed.  This  wealth  would 
be  divided  by  its  character  and  by  the  disposition  of  it  which 


WAGES.  253 

was  intended  by  the  persons  who  owned  it,  in  the  then  begin- 
ning period  of  production,  into  fixed  capital,  raw  material,  and 
supplies  for  the  support  of  laborers.  In  one  country,  like  Eng- 
land, the  industrial  system  might  be  such  that  the  support  of 
laborers  would  nearly  all  be  distributed  in  wages.  In  that  case 
the  term  "wage-fund"  might  with  great  propriety  be  applied 
to  it  as  a  technical  term  to  avoid  a  circumlocution.  In  another 
country,  like  the  United  States,  the  supplies  for  the  support 
of  labor  might  be,  for  the  most  part,  owned  by  yeomen  farm- 
ers and  other  independent  laborers,  or  they  might  be  distrib- 
uted by  other  modes  of  remunerating  labor  than  wages.  A 
laborer  may  own  a  farm  and  support  himself  while  working, 
and  wait  for  his  pay  until  the  work  is  done.  He  then  advances 
part  of  the  capital  and  is  not  strictly  a  laborer  only.  He  may 
take  "store-pay."  In  that  case  he  also  advances  part  of  the 
capital  of  the  enterprise,  and  he  goes  into  the  market  to  borrow 
that  capital,  paying  very  heavy  discount  rates  for  it.  These 
cases  cannot  throw  any  light  on  wages.  They  have  to  be  noted 
only  to  eliminate  them  from  the  consideration  of  wages.  The 
wages  system  exists,  as  above  shown,  only  where  the  ratio  of 
population  to  land  is  such  that  a  class  is  differentiated  which, 
having  no  capital  or  land,  is  dependent  day  by  day  for  support 
on  a  contract  relation  with  those  who  have  capital.  We  have 
also  seen  that,  above  the  very  lowest  stage  of  life,  capital  must 
precede  and  be  the  means  to  every  productive  effort. 

In  the  actual  period  of  production  then,  on  a  wages  system,  the 
existing  supplies  for  laborers  are  distributed  to  laborers  in  wages 
while  they,  with  the  help  of  the  fixed  capital,  till  the  ground 
and  work  up  the  raw  materials,  transforming  the  old  capital  into 
a  new  product.  The  risk,  as  we  have  seen,  belongs  to  capital,  and 
the  great  advantage  of  the  wages  system  is  that  it  leaves  the 
risk  all  on  capital.  The  laborer  works  by  time,  and  when  the 
time  is  over  his  contract  is  fulfilled.  He  takes  no  risk  or  re- 
sponsibility. He  is  therefore  at  liberty  to  address  himself  to 
the  accumulation  of  capital  in  the  simplest  possible  manner,  by 
economy  of  his  wages,  undisturbed  by  other  elements.  His  share 
in  the  business  lasts  during  the  period  of  production  and  ends 
with  it.  He  has  no  claim  or  right  in  the  product,  for  he  sold 
his  share  in  producing  it  and  took  his  pay  for  it  during  the  pro- 


254  THE  PRINCETON  REVIEW. 

cess.  The  product  is  divided  at  the  end  of  the  period  of  pro- 
duction into  the  replacement  of  the  capital  (support  of  laborers, 
raw  material,  and  wear  of  fixed  capital),  profits,  and  rents.  As 
the  capital  to  be  replaced  belonged  to  the  capitalist,  all  the  re- 
placement goes  to  him  together  with  the  profits.  Rent  goes  to 
the  land-owner.  The  products  are  next  distributed  by  supply 
and  demand  amongst  all  the  members  of  the  society,  who  turn 
them  into  capital  and  divide  them,  according  to  their  good  judg- 
ment, into  the  same  parts  as  before,  the  product  of  the  last 
period  perhaps  becoming  the  raw  material  of  the  next,  and 
another  period  of  production  is  then  begun.  If  the  product 
and  profit  of  the  last  period  were  large,  the  accumulation  of 
capital  will  be  large — that  is,  the  stock  of  supplies  for  laborers 
in  the  next  period  will  be  great ;  but  it  is  not  until  the  next 
period,  and  after  an  increase  of  capital,  that  any  effect  on  wages 
can  be  produced.  Hence  it  is  clear  that  wages  and  profits  are 
not  parts  of  the  same  whole.  Wages  were  in  capital  at  the 
beginning  of  the  period  of  production;  profits  are  in  the  pro- 
duct at  its  close.  We  cannot  establish  any  equation  between 
the  wages  and  the  total  capital,  or  the  profits  and  the  total  pro- 
duct, or  the  total  capital  and  the  total  product.  How  then  can 
we  establish  an  equation  between  wages  and  profits  so  as  to 
determine  the  effect  on  one  of  variations  in  the  other? 

When  now  we  have  thus  analyzed  the  operation  in  detail  of 
the  constant  action  and  reaction  by  which  the  industrial  func- 
tions of  society  are  carried  on,  it  is  immaterial  what  may  be  the 
speed  at  which  the  process  goes  forward,  or  what  may  be  the 
varieties  of  detail  in  different  industries.  Nothing  can  alter  the 
nature  or  sequence  of  the  forces  and  effects.  The  effect  of 
credit  to  economize  time  and  synchronize  certain  steps  changes 
nothing  in  the  scientific  analysis  of  the  process.  It  is  a  separate 
complication  and  refinement  to  be  studied  hv  itself. 

Four  inferences  may  be  drawn  immediately. 

(i)  We  see  that  all  questions  whether  the  laborer  gets  his 
share  of  the  product  or  not  are,  under  the  wages  system,  non- 
sensical. (2)  That  the  appeal,  often  made  in  England,  to  work- 
men to  take  lower  wages,  so  that  the  English  products  can  be 
sold  cheaper  in  foreign  markets,  are  founded  on  false  concep- 
tions of  wages,  and  ought  to  have  no  weight.     (3)  That  the 


WAGES.  2$$ 

arguments  of  the  American  protectionists,  drawn  from  compara- 
tive rates  of  wages,  are  all  fallacious.  (4)  That  the  attempt 
to  connect  wages  with  the  price  of  products,  by  a  sliding  scale 
or  otherwise,  is  founded  on  no  true  relations,  and  is  doomed 
to  failure.  If  an  employer  should  say  to  his  men,  "  My  business 
is  not  prosperous  like  that  of  my  neighbors.  I  want  you  to  work 
for  me  for  $2  a  day,  altho  the  market  rate  which  you  could  get 
is  $2.25," — he  would  not  deserve  a  respectful  reply.  Neither  is 
there  any  sense  at  all  in  the  demand  of  the  men,  if  they  say  to 
the  employer,  "  Your  business  is  exceptionally  prosperous,  and 
we  want  you  to  give  us  $2.25,  altho  the  market  rate  which  we 
could  get  elsewhere  is  $2." 

The  notion  that  wages  ever  can  be  paid  out  of  product  is 
the  most  ridiculous  notion  which  has  ever  been  introduced  into 
political  economy.  It  would  mean  that  a  man  who  was  tilling 
the  ground  in  June  could  eat  the  crop  he  expected  to  have  in 
September,  or  that  a  tailor  could  be  wearing  the  coat  which  he 
was  making.  Men  could  then  eat  their  intentions,  wear  their 
hopes,  and  be  warmed  by  their  promises.  Even  more  than  this ; 
they  might  then  believe  that  regrets  were  no  longer  vain,  and  hav- 
ing borrowed  the  future  they  could  recall  the  past.  The  man  who 
has  been  industrious  to-day  has  a  supper  to-night.  The  man 
who  has  been  idle  to-day  is  hungry  to-night.  If  wages  can  be 
paid  out  of  product,  the  latter  man,  in  his  hunger,  penitence, 
and  regret,  might  as  well  obtain  a  loaf  advanced  from  nature  on 
credit  to-night  as  to  get  one  at  any  other  time  before  he  has 
won  it  by  labor.  He  could  then  eat  and  sleep,  and  in  the  morn- 
ing he  could  break  his  promise  to  nature  and  refuse  to  produce 
the  loaf.  Whenever  nature  yields  to  man  an  atom  which  he 
has  not  earned,  or  advances  it  one  second  of  time  before  he  has 
earned  it,  we  may  all  turn  socialists  and  utopists.  The  real  gist 
of  the  question  about  wages  lies  right  here.  The  "  wage-fund  " 
is  of  no  importance  one  way  or  another.  Every  one  who  has 
yielded  to  sentimental  faiths  or  longings  to  lessen  the  hardships 
of  getting  a  living,  or  to  discover  some  way  by  which  men  may 
attain  to  happiness  except  by  conquering  it,  has  seen  himself 
forced  to  attack  the  doctrine  that  wages  are  paid  out  of  capital. 

Some  instances  of  the  fallacy  about  wages  which  has  just 
been  exposed  are  worth  analyzing.     In  the  July  number  of  the 


256  THE  PRINCETON  REVIEW. 

Princeton  Review  Mr.  Carroll  D.  Wright  gives  two  cases 
which  he  makes  the  basis  of  deduction  on  the  doctrine  that 
wages  are  paid  out  of  capital.     The  first  case  is  stated  thus: 

"  The  workers  are  often  the  direct  cause  of  the  reduction  in  wages.  This 
is  well  illustrated  by  circumstances  within  my  observation.  A  well-known 
and  prosperous  dealer  in  boots  and  shoes  in  one  of  our  large  shoe  towns  is 
very  popular  with  the  workingmen  because  he  will  sell  them  a  pair  of  boots 
for  a  quarter  less  than  the  same  quality  can  be  purchased  elsewhere.  It 
does  not  occur  to  them  that  they  have  paid  that  discount,  but  they  com- 
plain to  their  employers  who  have  cut  them  down — a  cut-down  required 
in  order  to  furnish  the  popular  dealer  with  goods  at  a  low  price  to  enable 
him  to  undersell  smaller  dealers.  This  retail  dealer  obtains  from  the  man- 
ufacturer his  lowest  price  for  making  one  hundred  cases  as  per  sample.  He 
then  offers  to  pay  so  much — a  sum  less  than  the  manufacturer's  estimate 
— and  pay  cash.  The  manufacturer  rather  than  lose  a  good  cash  order 
consents  to  make  the  goods,  but  not  being  able  to  reduce  the  cost  of  raw 
material  takes  the  discount  out  of  labor,  and  the  workman  berates  the 
employer  for  reducing  his  wages  while  he  praises  the  dealer  for  selling  him 
his  boots  at  a  low  price.     Such  circumstances  often  exist," 

The  inference  which  we  are  invited  to  make  is  that  the 
workmen  were  foolish  to  buy  where  they  could  buy  most 
cheaply  because  they  thereby  caused  their  own  wages  to  be 
reduced. 

In  the  first  place,  is  the  case  correctly  observed?  If  so,  the 
employer-manufacturer  sold  goods  by  favoritism  to  one  dealer 
who  lowered  his  price  to  all  his  customers,  and  the  employer 
lowered  his  wages  for  all  his  production  so  that  his  men  had  less 
to  spend  for  all  objects  of  their  desire.  The  employer,  there- 
fore, in  the  last  analysis,  took  something  from  his  men  and  gave 
part  of  it  to  the  general  public  of  the  vicinity  and  kept  part 
himself,  while  his  men  lost  on  their  wages  what  they  gained  on 
their  shoes  and  more  too.  No  one  can  regard  such  a  statement 
as  correct  who  has  any  conception  of  economic  laws  and  rela- 
tions. The  true  facts  lie  on  the  face  of  the  statement.  The 
reduction  in  price  to  the  retailer  came  out  of  interest  and  insur- 
ance against  bad  debts,  because  it  was  given  for  cash.  It  did 
not  have  any  connection  at  all  with  wages.  It  is  to  be  assumed 
that  the  manufacturer  would  have  given  similar  terms  to  any 
retailer  who  would  have  paid  cash.  Otherwise  he  would  have 
been  guilty  of  favoritism  which  would  have  ruined  his  business. 


WAGES.  257 

If  wages  were  reduced,  that  act  could  not  have  had  any  connec- 
tion at  all  with  the  fact  that  the  employer  had  allowed  to  one 
customer  a  reduction  for  cash.  Were,  then,  the  men  wise 
to  profit  by  the  reduction?  Undoubtedly  they  were.  Mr. 
Wright  is  driven  by  his  view  of  the  matter  into  the  venerable 
fallacy  that  we  get  rich  by  what  we  spend,  not  by  what  we  save, 
or  that  a  demand  for  commodities  is  a  demand  for  labor.  That 
is  really  the  fallacy  at  the  bottom  of  all  the  unsound  views  of 
wages,  but  it  is  a  certain  extension  of  it  to  hold  that  the  way 
for  the  men  to  make  their  wages  large  is  themselves  to  demand 
a  great  many  of  their  own  products ;  that  is,  to  spend  their 
money  freely. 

Mr.  Wright's  second  case  is  this : 

"The  day-laborer  feeling  himself  more  of  a  man  than  formerly  must 
oftener  wear  a  white  laundered  shirt,  but  he  cannot  pay  over  fifty  cents 
for  one.  The  demand  of  the  higher  civilization  of  the  day-laborer  must 
be  met,  and  white  laundered  shirts  are  supplied  at  retail  for  fifty  cents,  and 
even  for  thirty-seven  cents.  But  the  wages  of  the  women  who  make 
them  have  been  reduced  to  eight  cents  per  shirt.  All  such  illustrations 
are  simple,  but  well  adapted  to  show  the  workingman  what  is  meant  by 
wages  being  paid  from  the  product  of  labor,  and  in  accordance  with  the 
profit  which  may  be  expected  from  the  sale  of  the  product." 

What  effect  this  proof  of  the  effect  of  paying  wages  out  of 
product  may  have  on  the  laborer  I  cannot  say,  but  I  should 
think  that  it  might  arrest  the  economist  by  some  misgivings  as 
to  his  dogma.  The  fixed  fact,  the  known  quantity,  in  this  case 
is  "  the  demand  of  the  higher  civilization  of  the  day-laborer." 
The  day-laborer  appears  to  be  in  command  of  the  situation. 
He  decides  that  he  wants  a  white  laundered  shirt  and  that  he 
only  wants  to  pay  fifty  cents  for  it.  Considering  that  he  is  the 
first  man  in  the  history  of  the  human  race  who  has  ever  been  in 
a  position  to  make  his  wants  the  law  of  his  satisfactions,  he  cer- 
tainly is  moderate.  As  it  is,  his  demand  is  satisfied  by  cutting 
the  sewing-women  down  to  eight  cents  wages.  He  might  have 
called  for  shirts  at  a  cent  apiece,  in  which  case  the  sewing-woman 
must  have  seen  her  wages  reduced  to  two  or  three  mills.  He 
might  have  demanded  boots  at  twenty-five  cents,  coats  at  fifty 
cents,  cigars  ten  for  a  cent,  and  so  on,  and  the  wages  of  boot- 
makers, tailors,  and  cigar-makers  must  have  come  down  in 
18 


2S8  THE  PRINCETON  REVIEW. 

obedience  to  the  law  that  wages  come  out  of  product,  to  the 
proper  figure  to  satisfy  his  demand.  Mr.  Wright  would  be 
forced  to  argue  that  the  way  for  the  wages  class  to  improve  their 
condition  is  to  buy  each  other's  products  freely  at  generous 
prices.  I  am  a  day-laborer  myself.  My  higher  civilization 
demands  that  I  have  a  saddle-horse  for  five  dollars  and  a  cottage 
at  Newport  for  a  hundred  dollars.  If  wages  are  paid  out  of 
product,  I  presume  that,  now  that  I  have  published  my  wishes, 
they  will  be  gratified  not  later  than  next  summer.  As  for 
horse-breeders  and  builders,  let  them  look  to  their  wag-es.  I 
should  like  the  cottage  furnished. 

The  wild  and  untrained  writers  on  political  economy  per- 
form one  useful  function.  They  seize  on  all  the  fallacies  and, 
naively  and  with  good  faith,  perpetrate  the  reductio  ad  absurdiim, 
Mr.  George  holds  that  wages  are  paid  out  of  product,  and  that 
they  are  a  portion  only  of  the  laborer's  own  product  which  the 
employer  gives  back  to  him.  If  this  is  true,  it  suggests  three 
questions:  i.  What  is  the  difference  between  a  slave  and  a 
wage-receiver?  2.  Why  is  any  man  an  employee?  3.  Why  is 
not  every  man  an  employer? 

The  rate  of  wages  is  determined,  like  every  other  case  of 
value,  by  supply  and  demand.  The  total  capital  will  be  divided 
between  wages,  raw  material,  and  capital  by  supply  and  demand. 
Capital,  however,  is  limited  by  its  nature  with  respect  to  the 
extent  to  which  it  may  be  transferred  from  one  of  these  divi- 
sions to  the  other.  From  period  to  period  the  capital,  when 
reproduced,  is  transformed  into  one  or  the  other  class  by  the 
dynamical  operation  of  supply  and  demand. 

From  period  to  period  changes  in  the  arts,  in  the  industrial 
development,  in  national  habits,  in  fashion  as  to  co-operation, 
etc.  etc.,  will  alter  the  proportion  between  the  amount  of  capital 
paid  in  wages  and  the  amount  used  to  support  laborers  under 
other  industrial  organizations.  The  supply  of  laborers  in  one 
or  the  other  mode  of  industry  will  also  vary.  Capital  is  divided 
between  the  wages  system  and  other  systems  by  supply  and 
demand. 

Changes  in  fashion,  art,  science,  education,  etc.,  will  alter  the 
relative  importance  of  non-competing  groups  in  industry.  Gen- 
eral changes  will  also  affect  the  number  of  laborers  in  each  of 


WAGES.  259 

the  non-competing  groups.  Capital  is  divided  between  the 
non-competing  groups  by  supply  and  demand. 

Inside  of  any  one  group  the  capital  of  that  group  will  be 
distributed  (in  the  absence  of  trades-union  rules  or  other  in- 
terferences) by  supply  and  demand,  according  to  the  demand, 
and  supply  of  personal  talents  and  capacities. 

Some  have  inferred  from  the  application  of  supply  and  de- 
mand to  wages  that  the  problem  of  wages  was  a  simple  case  of 
a  ratio,  so  much  capital  to  so  many  men.  The  error  here  lies 
in  applying  a  mathematical  relation  which  is  far  too  simple  for 
the  facts  of  the  case.  I  have  stated  above  what  is  the  simplest 
mathematical  form  of  an  exchange  under  supply  and  demand. 
Obviously  it  is  a  great  error  to  treat  it  as  a  simple  ratio  of  arith- 
metical quantities,  or  even  as  a  ratio  of  variables. 

Others  have  turned  away  from  the  application  of  supply  and 
demand  with  impatience.  The  Germans  like  to  say  of  it  that  it 
is  nichtssagend.  Some  of  them  put  "  law"  in  quotation  when 
they  speak  of  it.  Any  one  who  can  sneer  at  supply  and  demand 
or  regard  it  as  a  barren  formula  has  certainly  failed  to  under- 
stand it,  or  to  study  the  scope  and  subtlety  of  its  action.  No 
one  has  ever  analyzed  supply  and  demand,  regarded  dynami- 
cally, because  no  one  can.  Leroy-Beaulieu  says:  "We  cannot 
affirm  that  this  formula  [supply  and  demand]  is  false.  We 
ought  only  to  say  that  it  is  philistine  and  commonplace.  It  is 
certainly  true,  as  Cobden  said,  that  when  two  bosses  run  after 
one  workman  wages  rise,  and  when  two  workmen  run  after  one 
boss  wages  fall;  but  this  sort  of  truism  is  not  fitted  to  satisfy 
strict  thinkers.  What  are  the  circumstances  which  determine 
the  demand  and  the  supply?"  This  last  question  he  does  not 
answer,  nor  even  attempt  to  answer.  It  seems  to  me  that 
a  strict  thinker  proves  himself  by  recognizing  an  ultimate 
scientific  fact  or  law  when  he  comes  to  it.  The  more  one 
studies,  the  more  one  finds  that  the  results  of  all  studies  are 
truisms.  One  is  astonished  that  he  did  not  see  at  once,  by  pure 
common-sense,  the  highest  and  last  result  of  laborious  investiga- 
tion. If  there  is  anything  philistine  and  commonplace,  it  is  to 
set  aside  the  results  of  study  as  "  truisms,"  and  to  pursue  ques- 
tions which  can  only  lead  off  again  into  a  maze  of  unclassified 
phenomena.     Further  on  the  same  author  says  that  in  addition 


26o  THE  PRINCETON  REVIEW. 

to  the  supply  and  demand  of  labor  we  must  take  into  account 
the  fecundity  of  capital.  He  urges  that  the  demand  for  labor  is 
a  function  not  simply  of  the  amount  of  capital,  but  also  of  its 
organization  and  activity.  But  in  any  given  period  of  produc- 
tion any  new  activity  or  improved  application  of  capital  cannot 
act  upon  the  wages  during  that  period.  The  advantage  will 
appear  in  the  product  of  that  period,  it  will  swell  the  capital  of 
the  next  period  and  then  act  upon  wages.  He  then  adds :  "  It 
is  not  proper  to  say  simply,  The  more  capital  increases  rela- 
tively to  population,  the  more  do  wages  rise.  This  proposition 
would  be  either  inexact  or  incomplete,  for  the  productive  force 
may  advance  far  more  rapidly  than  the  accumulation  of  ma- 
terial capital."  This  objection  is  not  sound.  If  productive 
force  increases,  it  immediately  produces  more  capital.  That  is 
the  proof  that  it  has  increased,  and  the  mode  in  which  the  gain 
from  increased  force  is  realized.  Advance  in  productive  power 
is  therefore  followed  by  increase  of  capital  within  an  interval  of 
at  least  one  period  of  production,  altho  further  increase  of 
capital,  due  to  the  same  development  of  productive  power,  may 
continue  to  advance  in  a  geometrical  ratio  through  a  long  series 
of  subsequent  periods.  New  machines  produce  quick  and 
approximately  uniform  increase  of  capital.  Education  or  better 
government  produce  slower  returns,  which  advance  at  a  high 
ratio  through  a  long  period.  The  same  author  then  comes  to 
the  "true  formula"  which  he  proposes  "after  having  set  aside 
the  formulas  and  inflexible  notions  of  the  principal  economists:" 
"  The  more  production  increases  relatively  to  population,  the 
greater  is  the  chance  that  wages  may  rise."  We  have  here  a 
capital  example  of  the  necessity  of  separating  the  element  of 
time  in  economic  problems,  and  subjecting  it  to  special  study. 
We  set  out  to  find  a  formula  for  what  determines  the  rate  of 
wages,  which  is  always  a  fact  of  a  given  time  and  place.  We 
are  offered  a  formula  of  the  conditions  of  change  in  that  fact 
between  one  time  and  another.  Let  us  try  a  parallel.  It  is 
asked,  What  determines  the  weight  of  a  man  ?  The  answer  is, 
Gravity  acting  on  the  mass  of  his  body.  No,  M.  Leroy-Beau- 
lieu  would  say,  that  is  a  formula  or  inflexible  dogma  of  the 
principal  physicists.  The  weight  of  a  man  is  determined  by  the 
fact  that,  if  he  has  a  good  constitution,  good  health,  good  diet, 


WAGES.  261 

obeys  hygienic  rules,  does  not  work  too  hard,  loses  no  limb  by 
accident,  etc.  etc.,  his  weight  may  increase  from  one  time  to 
another.  Such  errors  would  be  impossible  in  any  science  but 
political  economy,  but  recent  economic  literature  is  largely 
made  up  of  just  such  confused  thinking  and  reasoning.  The 
rate  of  wages  is  the  rate  at  which  services  are  exchanged  for 
means  of  subsistence  under  free  contract  and  competition.  It 
is  therefore  determined  by  supply  and  demand,  like  price,  rate 
of  interest,  rate  of  foreign  exchange,  and  all  other  cases  of  value. 
We  find  therefore  that  there  never  ought  to  have  been  any 
"  question"  about  wages  at  all,  any  more  than  there  should  have 
been  a  question  about  raw  material  or  fixed  capital.  It  is  all 
wasted  energy  to  re-analyze  the  subject  and  expose  the  fallacies 
which  have  been  introduced  by  incompetent  meddlers  in  econo- 
mic science,  encouraged  by  the  concessions  of  the  economists. 
Wages  do  not  belong  in  distribution  at  all.  They  belong  in  the 
application  of  capital  to  production.  The  capitalist-employer 
is  led  by  self-interest  to  try  to  keep  wages  down  just  exactly  as 
he  tries  to  prevent  waste  of  raw  material  or  wear  and  tear  of 
fixed  capital.  The  employee  is  led  by  self-interest  to  try  to  get 
all  the  wages  he  can.  The  struggle  is  legitimate  and  necessary. 
The  result  of  it  is  that  supply  and  demand  distribute  the  capital 
amongst  the  laboring  wage-receivers  in  the  proportion  which 
conduces  to  the  maximum  of  production  under  all  the  existing 
circumstances.  If  trades-unions  or  employers'  associations  intro- 
duce interferences  they  may  temporarily  disturb  this  adjust- 
ment, but  all  such  interferences  avenge  themselves  in  the  end 
by  compensating  reactions.  If  a  man  knows  how  to  earn  more 
than  he  is  getting,  he  ought  to  insist  on  getting  more  where  he 
is  or  he  should  change.  If  an  employer  can  get  an  equally  com- 
petent man  at  lower  wages,  he  ought  to  get  him  or  lower  wages. 
If  we  depart  at  all  from  this  rule,  we  entangle  ourselves  in  an 
endless  muddle  of  sentimental  rubbish,  we  lower  production, 
and  contract  the  welfare  of  all.  There  is  therefore  no  "  social 
question,"  or  struggle  of  class  with  class,  involved  in  wages. 
The  notion  that  there  is  under  "  distribution"  some  new  and 
unexplored  field  of  economic  science  is  entirely  without  founda- 
tion. That  notion  threatens  to  bring  political  economy  still 
further  under  the  dominion  of  metaphysics  and  sentiment,  by 


262 


THE  PRINCETON  REVIEW. 


the  introduction  of  some  notion  of  "justice,"  derived  aliunde, 
as  a  controlling  conception  in  economical  science.  It  is  indeed 
painful  to  think  what  an  immense  amount  of  poetry  and  decla- 
mation is  swept  away  when  we  once  get  at  the  truth  of  the 
relations  with  which  we  have  been  dealing.  If  these  relations 
were  correctly  understood,  it  would  be  impossible  to  make 
people  any  longer  applaud  the  orator  who  finds  it  unjust  that 
an  industrious  man  is  better  off  than  a  lazy  one,  or  who  wants  a 
revolution  because  the  man  who  has  won  capital  by  self-denial 
gets  more  luxurious  living  for  himself  and  his  children  than  the 
man  who  has  spent  as  he  went  along.  We  should,  however, 
have  more  sober  industry  and  manly  effort  on  the  part  of  free, 
independent,  and  intelligent  laborers  to  win  capital  and  to  put 
themselves  and  their  children  in  a  better  position.  There  is  no 
reason  at  all,  at  this  moment,  barring  disease  and  accident,  why 
any  man  living  should  not  acquire  capital,  and,  in  view  of  the 
progress  in  the  arts,  there  is  no  reason  to  apprehend,  as  far  in 
the  future  as  we  can  see,  that  this  chance  will  not  become 
rather  greater  than  less  for  all  who  are  prudent,  industrious, 
and  frugal,  and  who  will  turn  their  backs  on  the  social  doctors 
who  have  patent  schemes  for  making  everybody  happy  by  set- 
ting those-who-have-not  to  rob  those-who-have. 

William  G.  Sumner. 


YALE  COLLEGE 

LOAN  LIBRARY 
of  Political  Economy. 


AA    001  120  498  9 


